  We investigate the collapse of a circularly symmetric star with outgoing
radiation in ($2+1$)-dimensional anti-de Sitter spacetime. The exterior
spacetime of the collapsing star is assumed to be described by the non-static
generalization of the Ba\~nados, Teitelboim and Zanelli [{\em Phys. Rev. Lett.}
{\bf 69} (1992) 1849 ] metric. Making use of the junction conditions joining
smoothly the interior and the exterior spacetimes across the boundary, we
analyze the impacts of various factors on the evolution of the star which
begins its collapse from an initial static configuration. In particular,
depending on initial conditions, two possible outcomes of the collapse process
are shown: (i) formation of a BTZ black hole, and (ii) evaporation of all
mass-energy even before the singularity is reached.
