Industrial Competition, Shifts in Market Share and Productivity Growth

Abstract

This paper investigates the extent to which productivity growth is the result of turnover - the process that shifts output from one firm to another as a result of the competitive process. Turnover occurs because some firms gain market share and others lose it. Some turnover is due to entry and exit. The other part arises from growth and decline in incumbent continuing producers. The paper proposes a method for measuring the impact of plant turnover on productivity growth and outlines how this contribution has changed in Canada as a result of substantial trade liberalization in the 1990s.

Keywords: industrial competition, shifts, market share, productivity growth

JEL Classification: L1, D24, J24, L6