[go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/p/cen/wpaper/24-70.html
   My bibliography  Save this paper

Industry Shakeouts after an Innovation Breakthrough

Author

Listed:
  • Xiaoyang Li
Abstract
Conventional wisdom suggests that after a technological breakthrough, the number of active firms first surges, and then sharply declines, in what is known as a “shakeout”. This paper challenges that notion with new empirical evidence from across the U.S. economy, revealing that shakeouts are the exception, not the rule. I develop a statistical strategy to detect breakthroughs by isolating sustained anomalies in net firm entry rates, offering a robust alternative to narrative-driven approaches that can be applied to all industries. The results of this strategy, which reliably align with well-documented breakthroughs and remain consistent across various validation tests, uncover a novel trend: the number of entry-driven breakthroughs has been declining over time. The variability and frequent absence of shakeouts across breakthrough industries are consistent with breakthroughs primarily occurring in industries with low returns to scale and with modest learning curves, shifting the narrative on the nature of innovation over the past forty years in the U.S.

Suggested Citation

  • Xiaoyang Li, 2024. "Industry Shakeouts after an Innovation Breakthrough," Working Papers 24-70, Center for Economic Studies, U.S. Census Bureau.
    • Handle: RePEc:cen:wpaper:24-70
    as

    Download full text from publisher

    File URL: https://www2.census.gov/library/working-papers/2024/adrm/ces/CES-WP-24-70.pdf
    File Function: First version, 2024
    Download Restriction: no
    ---><---

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cen:wpaper:24-70. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Dawn Anderson (email available below). General contact details of provider: https://edirc.repec.org/data/cesgvus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.