This paper conducts the first general equilibrium analysis of the role of entry, exit and profits in industry dynamics …, to discriminate between three aspects of industry dynamics: the effect of entry and exit on market equilibrium, duration … simultaneous equilibrium model of profits, entry and exit. We find that indeed entrants play an entrepreneurial function causing …

-equilibrium model that features mergers, entry, and exit by heterogeneous firms. Mergers affect productivity directly through realized … firms' entry and exit decisions. We show that ignoring the implications of merger activity for public policies that promote … synergies, and indirectly through firms' incentives to enter or exit the industry. Merger activity increases average firm …

disequilibrium but little empirical research has examined firm entry and exit in this context. We redress this by modelling the … interrelationship between firm entry and exit in disequilibrium. Introducing a new methodology we investigate whether this … new-firm entry) while in overshoots competition induced by new firms (in particular strong displacement) helps restore …