nep-ind New Economics Papers
on Industrial Organization
Issue of 2017‒03‒05
two papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. Learning, Prices, and Firm Dynamics By Paulo Bastos; Daniel A. Dias; Olga A. Timoshenko
  2. The Characteristics and Performance of Family Firms: Exploiting information on ownership, governance and kinship using total population data By Andersson, Fredrik; Johansson, Dan; Karlsson, Johan; Lodefalk, Magnus; Poldahl, Andreas

  1. By: Paulo Bastos; Daniel A. Dias; Olga A. Timoshenko
    Abstract: We document new facts about the evolution of firm performance and prices in international markets, and propose a theory of firm dynamics emphasizing the interaction between learning about demand and quality choice to explain the observed patterns. Using data from the Portuguese manufacturing sector, we find that: (1) firms with longer spells of activity in export destinations tend to ship larger quantities at lower prices; (2) older exporters tend to use more expensive inputs; (3) revenue growth within destinations (conditional on initial size) tends to decline with market experience; and (4) input prices and quantities tend to increase with revenue growth within firms. We develop a model of endogenous input and output quality choices in a learning environment that is able to account for these patterns. Counterfactual simulations reveal that minimum quality standards on traded goods reduce welfare by lowering entry in export markets and reallocating resources from old and large towards young and small firms.
    Keywords: Learning about demand ; Prices ; Product quality ; Firm dynamics ; Quality standards
    JEL: F12 F14 L11 O14
    Date: 2017–02–08
    URL: http://d.repec.org/n?u=RePEc:fip:fedgif:1193&r=ind
  2. By: Andersson, Fredrik (Statistics Sweden); Johansson, Dan (Örebro University School of Business); Karlsson, Johan (Örebro University School of Business); Lodefalk, Magnus (Örebro University School of Business); Poldahl, Andreas (Statistics Sweden)
    Abstract: Family firms are often considered characteristically different from non-family firms, and the economic implications of these differences have generated significant academic debate. However, our understanding of family firms suffers from an inability to identify them in total population data, as this requires information on owners, their kinship and involvement in firm governance, which is rarely available. We present a method for identifying domiciled family firms using register data that offers greater accuracy than previous methods. We then apply it to data from Statistics Sweden concerning firm ownership, governance and kinship over the years 2004-2010. Next, we use Swedish data to estimate these firms’ economic contribution to total employment and gross domestic product (GDP) and compare them to private domiciled non-family firms in terms of their characteristics and economic performance. We find that the family firm is the prevalent organizational form, contributing to over one-third of all employment and GDP. Family firms are common across industries and sizes, ranging from the smallest producers to the largest multinational firms. However, their characteristics differ across sizes and legal forms, thereby indicating that the seemingly contradictory findings among previous studies on family firms may be due to unobserved heterogeneity. We furthermore find that they are smaller than private non-family firms in employment and sales and carry higher solidity, although they are more profitable. These differences diminish with firm size, however. We conclude that the term ‘family firm’ contains great diversity and call for increased attention to their heterogeneity.
    Keywords: entrepreneur; family firms; employment; GDP; register data
    JEL: D22 G32 J21
    Date: 2017–02–21
    URL: http://d.repec.org/n?u=RePEc:hhs:oruesi:2017_001&r=ind

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