Creative Destruction in Industries ∗ Boyan Jovanovic and

  • Chung-Yi Tse
  • Published 2007

Abstract

Industries where prices decline rapidly experience early ‘shakeouts’. Existing models of the shakeout do not explain this negative relation between price decline and time to shakeout. We set up a vintage-capital model that explains this relation, and we provide some evidence in support of the mechanism that we propose. The relation emerges naturally in a… (More)

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