Motivated by relatively recent theoretical contributions on the role played by uncertainty, sunk costs and technological change in influencing entry, exit and industry structure, we conduct an empirical analysis covering 267 U.S. manufacturing industries over the period 1963-1992.

Trade barriers are failing and U.S. producers are competing in increasingly open international markets. Further, data reveal considerable heterogeneity across industries in the intertemporal path of import-penetration. Against this backdrop, we focus on an issue that is increasingly important...