From Russia with love: The impact of relocated firms on incumbent survival
We identify the impact of local firm concentration on incumbent performance in a historic setting that has quasi-experimental characteristics. 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.
Year of publication: |
2013
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Authors: | Falck, Oliver ; Guenther, Christina ; Heblich, Stephan ; Kerr, William R. |
Institutions: | Volkswirtschaftliche Fakultät, Ludwig-Maximilians-Universität München |
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