Equilibrium exit in stochastically declining industries

Success strategies in declining industries

Controlled Equilibrium Selection in Stochastically Perturbed Dynamics

We consider a dynamical system with finitely many equilibria and perturbed by small noise, in addition to being controlled by an ‘expensive’ control. The controlled process is optimal for an ergodic criterion with a running cost that consists of the sum of the control effort and a penalty function on the state space. We study the optimal stationary distribution of the controlled process as the ...

Oblivious equilibrium for concentrated industries

This paper explores the application of oblivious equilibrium to concentrated industries. We define an extended notion of oblivious equilibrium that we call partially oblivious equilibrium (POE) that allows for there to be a set of “dominant firms”, whose firm states are always monitored by every other firm in the market. We perform computational experiments that show that POE are often close to...

Export Entry, Export Exit, and Productivity in German Manufacturing Industries

This paper contributes to the flourishing literature on exports and productivity by using a unique newly available panel of exporting establishments from the manufacturing sector of Germany from 1995 to 2004 to test three hypotheses derived from a theoretical model by Hopenhayn (Econometrica 1992): (H1) Firms that stop exporting in year t were in t-1 less productive than firms that continue to ...

Exit from Two Declining Markets with Technological Complementarities1

We study the exit behavior of a firm in multiple declining markets with an extension of Ghemawat and Nalebuff (1985) to a multimarket environment. We find that the multimarket firms pool their commitment of staying in individual markets when there are technological complementarities between markets, and thereby, may change the credibility of the threat of staying in the war of attrition. The la...