Inter-firm rivalry and firm growth: Is there anyevidence of direct competition between firms?

Inter-rm competition has received much attention in the theoreticalliterature, but recent empirical work suggests that the growth rates of ri-val rms are uncorrelated, and that rm growth can be taken as an essen-tially independent process. We begin by investigating the correlations of thegrowth rates of competing rms (i.e. the largest and second-largest rms inthe same industry) and observe that, surprisingly, the growth of these rmscan be taken as independent. Nevertheless, peer-eect regressions, that takeinto account the simultaneous interdependence of growth rates of rival rms,are able to identify signicant negative eects of rivals' growth on a rm'sgrowth.