nep-tid New Economics Papers
on Technology and Industrial Dynamics
Issue of 2013‒09‒26
one paper chosen by
Rui Baptista
Technical University of Lisbon

  1. Import-push or Export-pull? An Industry-level Analysis of the Impact of Trade on Firm Exit By Ina Charlotte Jäkel

  1. By: Ina Charlotte Jäkel (Department of Economics and Business, Aarhus University)
    Abstract: Does the selection effect of trade work solely through competition from imports, or does the export market further contribute to firm selection? This paper provides a re-interpretation of the different mechanisms in terms of selection on profitability - rather than productivity - and derives novel predictions regarding the export market and the role of product differentiation. Empirical results for a sample of Danish manufacturing industries confirm the import-"push" hypothesis as well as the export-"pull" hypothesis, but also reveal differences across industries. The selection effect of trade is mainly driven by the "import-push" if product differentiation is high, whereas it is driven by the "export-pull" if goods are homogeneous.
    Keywords: Firm exit, Exports, Import competition, Heterogeneous firms
    JEL: F12 F15 D21
    Date: 2013–09–18

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