# What does “endogeneity of the industry structure” means?

Dong,2019,page 899 documented that:

We estimate Export Market Leniency Laws as the weighted average of the passage of leniency programs in all other countries, excluding the country in which the firm is headquartered:

$$\text{(Export Market Leniency Laws)}_{jkt} = \sum_k w_{kj}L_{kt},$$

where $$k$$ denotes any country other than country $$k$$, $$j$$ denotes a three-digit SIC industry, and $$t$$ denotes the year. $$w_{kj}$$ is the share of the three-digit SIC industry $$j$$’s exports from country $$k$$ to any other country $$k$$ out of all of the exports from industry $$j$$ in country $$k$$ in 1990. $$L_{kt}$$ is an indicator variable that takes a value of one if country $$k$$ passed a leniency program by year $$t$$, and zero otherwise. To avoid any endogeneity of the industry structure, we base the weights on the data in year 1990. The variable ranges from zero when none of the foreign countries that receive any exports from the firm’s industry have passed a law to one when all of the foreign countries with exports from the firm’s industry have passed leniency programs.

I do not understand what does "endogeneity of the industry structure" means in this context, and why we need to base the weights on the data in year 1990 to avoid this issue?

• 1. writing out equations is not done not to annoy people but in order to make the equations searchable. Please have a look at this link and familiarize yourself with mathjax math.meta.stackexchange.com/questions/5020/…. Since you are student of economics it will do you good for a future since most respected academicians use latex for their research and latex equations work virtually identically to mathjax 2. You should not post pictures of a text. – 1muflon1 May 8 at 8:45
• This time I edited it for you please next time try to do it yourself at least for the text – 1muflon1 May 8 at 8:53