On Marshallian Evolutionary Dynamics, Entry And Exit

New businesses add to capacity and, frequently but not always, they are the vehicles for innovation and the introduction of business experiments new to a trade. Entry and exit differ quite fundamentally though in their dynamic underpinnings. Entry is a positive decision to build capacity for a given market, it is forward looking and driven by at least an expectation of positive profits. Exit, by contrast is passive; it is a response to a loss of market and profit, it engages the management of decline when the forces at work are beyond the scope of a business to dictate its future.