Title

Why Do Rural Firms Live Longer?

Campus Units

Economics

Document Type

Article

Publication Version

Submitted Manuscript

Publication Date

4-2011

Journal or Book Title

American Journal of Agricultural Economics

Volume

93

Issue

3

First Page or Article ID Number

673

Last Page

692

DOI

10.1093/ajae/aaq173

Abstract

For the first thirteen years after entry, the hazard rate for firm exits is persistently higher for urban than for rural firms. While differences in observed industry market, local market, and firm attributes explain some of the rural/urban gap in firm survival, rural firms retain a survival advantage 18% greater in Iowa and 58% greater in Kansas than observationally equivalent urban firms. Evidence is consistent with a lower salvage price for the capital assets of failed rural firms. Entrepreneurs will require a higher success probability to enter a rural market rather than an urban market to leave their expected profits equal.

JEL Classification

R00

Comments

This is a working paper of an article from American Journal of Agricultural Economics 93 (2011): 673, doi: 10.1093/ajae/aaq173.