P.A. Geroski, M. Mazzucato
Modelling the dynamics of industry population
Keywords: Textbook models; domestic car producers; Particular market
JEL classification: L1; L6
Abstract: This paper examines four models which might be used to account for variations in the number of procedures who operate in a particular market over the lifetime of that market. Two of these are standard economics textbook models, one is a non-standard model and one is a textbook model derived from the literature in organizational ecology. The four models have several observable differences and this opens up the possibility of testing anyone against the others. We apply these four models to 93 years of data on the population of domestic car producers in the US car industry. The salient feature of this population is the very large rise and fall in the number of firms operating in the very early years of the industry, a phenomena which seems hard to account for using any of the three textbook models that we consider here.