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From Russia with love: the impact of relocated firms on incumbent survival

Falck, Oliver, Guenther, Christina, Heblich, Stephan and Kerr, William R. (2011) From Russia with love: the impact of relocated firms on incumbent survival. SERC Discussion Papers (SERCDP0088). Spatial Economics Research Centre, London School of Economics and Political Science, London, UK.

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Abstract

We identify the impact of local firm concentration on incumbent performance with a quasi natural experiment. When Germany was divided after World War II, many firms in the machine tool industry fled the Soviet occupied zone to prevent expropriation. We show that the regional location decisions of these firms upon moving to western Germany were driven by non-economic factors and heuristics rather than existing industrial conditions. Relocating firms increased the likelihood of incumbent failure in destination regions, a pattern that differs sharply from new entrants. We further provide evidence that these effects are due to increased competition for local resources.

Item Type: Monograph (Discussion Paper)
Official URL: http://www.spatialeconomics.ac.uk/SERC/publication...
Additional Information: © 2011 The Authors
Divisions: Spatial Economics Research Centre
Subjects: H Social Sciences > HC Economic History and Conditions
JEL classification: H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H25 - Business Taxes and Subsidies
J - Labor and Demographic Economics > J2 - Time Allocation, Work Behavior, and Employment Determination and Creation; Human Capital; Retirement > J20 - General
L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L10 - General
O - Economic Development, Technological Change, and Growth > O1 - Economic Development > O10 - General
R - Urban, Rural, and Regional Economics > R1 - General Regional Economics > R10 - General
Sets: Research centres and groups > Spatial Economics Research Centre
Date Deposited: 28 Jul 2014 12:15
Last Modified: 17 Dec 2019 00:56
Funders: Economic and Social Research Council, Department for Business, Innovation & Skills (BIS), Welsh Assembly Government
URI: http://eprints.lse.ac.uk/id/eprint/58348

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