Is the mechanism of firm selection efficient? An approach considering opportunity costs

// ABSTRACT IN ENGLISH: The recent literature has always attributed to the natural selection mechanism - along which only efficient firms can survive while inefficient ones are eliminated by market competition - a crucial role in the aggregated efficiency growth. By assuming that firms differ not only by their efficiency levels but by their opportunity costs too, our model shows that the selection mechanism can reduce aggregated efficiency especially when exiting firms are the most efficient ones. Our model also shows that both efficient and inefficient firms can coexist in the stationary equilibrium. This result can interpret some empirical findings such as the persistence of inefficient firms and the high dispersion of firms' efficiency levels. Reproduced by permission of Bibliothèque de Sciences Po