Survival of the Fittest or the Fattest? Exit and Financing in the Trucking Industry

Abstract

Abstract Most economic theories are either implicitly or explicitly based on an evolutionary argument: Competition and exit assure that only the most efficient firms survive. This argument implicitly relies on the existence of perfect capital markets. In the presence of capital market imperfections, efficient firms may be forced to exit due to lack of funds. Although this argument is well understood in theory (Telser (1966) and Bolton and Scharfstein (1990)), its empirical relevance is much less clear.