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Firm Entry and Exit in Local Markets: Market Pull and Unemployment Push

Author

Listed:
  • Marcus Dejardin

    (CERPE, University of Namur-FUNDP)

  • Martin Carree

    (Maastricht University)

Abstract

Firm entry and exit flows in the retailing and consumer services may be viewed as market equilibrating processes. Local markets with considerable market room and high unemployment ought to be characterized by high subsequent entry rates and low exit rates. However, lack of entrepreneurial alertness may inhibit this. We examine the relationship and obtain empirical results for a range of selected industries in 563 Belgian municipalities. We show that, over a three-year period, (net) entry is positively affected by the presence of local 'market room' and also by future market pull. We find 'unemployment push' effect on entry in easy-to-enter industries, but also a significant effect of unemployment on exit.

Suggested Citation

  • Marcus Dejardin & Martin Carree, 2011. "Firm Entry and Exit in Local Markets: Market Pull and Unemployment Push," Working Papers 1114, University of Namur, Department of Economics.
    • Handle: RePEc:nam:wpaper:1114
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    References listed on IDEAS

    as
    1. Martin Carree & Marcus Dejardin, 2007. "‘Entry Thresholds and Actual Entry and Exit in Local Markets’," Small Business Economics, Springer, vol. 29(1), pages 203-212, June.
    2. Martin Carree, 2002. "Does Unemployment Affect the Number of Establishments? A Regional Analysis for US States," Regional Studies, Taylor & Francis Journals, vol. 36(4), pages 389-398.
    3. Israel M. Kirzner, 1997. "Entrepreneurial Discovery and the Competitive Market Process: An Austrian Approach," Journal of Economic Literature, American Economic Association, vol. 35(1), pages 60-85, March.
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    5. Marcus Dejardin, 2006. "L'entrepreneuriat, le territoire et les conditions de leurs dynamiques cumulatives," Revue d'économie régionale et urbaine, Armand Colin, vol. 0(2), pages 185-201.
    6. Hattwick, Richard E., 1979. "Perception, opportunity and profit : Studies in the Theory of Entrepreneurship. By Israel M. Kirzner. Chicago: The University of Chicago Press, 1980. Pp. 239. Price: $15.00," Journal of Behavioral Economics, Elsevier, vol. 8(2), pages 183-188.
    7. Schultz, Theodore W, 1975. "The Value of the Ability to Deal with Disequilibria," Journal of Economic Literature, American Economic Association, vol. 13(3), pages 827-846, September.
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    9. Daniel Serra & Charles Revelle & Ken Rosing, 1999. "Surviving in a competitive spatial market: The threshold capture model," Economics Working Papers 359, Department of Economics and Business, Universitat Pompeu Fabra.
    10. David B. Audretsch, 1995. "Innovation and Industry Evolution," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262011468, April.
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    Cited by:

    1. Katharina Pijnenburg, 2013. "Self-Employment and Economic Performance: A Geographically Weighted Regression Approach for European Regions," Discussion Papers of DIW Berlin 1272, DIW Berlin, German Institute for Economic Research.

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    More about this item

    Keywords

    Entrepreneurship; Entry; Exit; Entrepreneurship; Unemployment;
    All these keywords.

    JEL classification:

    • L80 - Industrial Organization - - Industry Studies: Services - - - General
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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