| This dissertation studies the entry, exit and growth of firms from a theoretical and empirical point of view, making use of a rich panel data set of Chilean firms. Given that emerging economies have been highly neglected in empirical work on industry dynamics, filling this gap constitutes an important contribution. Chapter One presents evidence of endogenous sunk costs in the retail industry, while Chapter Two studies the determinants of firm survival. Chapter Three presents an estimable dynamic structural model of an oligopoly retail industry. Unlike existing models, it includes firm size and growth as endogenous variables, and considers two sources of permanent unobserved heterogeneity.;The first chapter uses data from retail industries in Chile to test Shaked and Sutton's (1987) hypothesis of endogenous sunk costs. I find that industries which are less likely to have endogenous sunk costs display a significant negative relationship between market size and concentration. In contrast, in the supermarket industry, where investment in advertising is presumed to be more intense, the tests show that concentration does not vary with market size and is bounded away from zero.;The second chapter tests and measures the effect that variables such as location, firm size, market size and aggregate shocks have on the probability of new firm survival. The main results are that, in general, the firm's age and the net entry into the industry increase the probability of survival while firm's start-up size decreases it. This contrasts with what has been found in previous studies for developed economies.;The third chapter presents an estimable model in which retail firms are assumed to be vertically and horizontally differentiated, compete in prices, make investments to improve the quality of their businesses, and decide whether or not to exit the market. It extends the model of Aguirregabiria and Mira (2007) by including firm size and growth as endogenous variables, and by allowing for permanent unobserved heterogeneity across local-markets and across firms. |
