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Appears in Collections:Economics Working Papers
Peer Review Status: Unrefereed
Title: From Russia with Love: The Impact of Relocated Firms on Incumbent Survival
Author(s): Falck, Oliver
Guenther, Christina
Heblich, Stephan
Kerr, William R
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Citation: Falck O, Guenther C, Heblich S & Kerr WR (2011) From Russia with Love: The Impact of Relocated Firms on Incumbent Survival. Stirling Economics Discussion Paper, 2011-17.
Keywords: Agglomeration
firm dynamics
JEL Code(s): R10
Issue Date: Jul-2011
Series/Report no.: Stirling Economics Discussion Paper, 2011-17
Abstract: We identify the impact of local firm concentration on incumbent performance with a quasi natural experiment. 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.
Type: Working or Discussion Paper
Affiliation: Ifo Institute for Economic Research, Germany
Max Planck Institute of Economics
Harvard University

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