Opposing firm-level Responses to the China Shock: Horizontal Competition Versus Vertical Relationships?

Philippe Aghion, Antonin Bergeaud, Matthieu Lequien, Marc Melitz and Thomas Zuber

No 29196, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We decompose the “China shock” into two components that induce different adjustments for firms exposed to Chinese exports: an output shock affecting firms selling goods that compete with similar imported Chinese goods, and an input supply shock affecting firms using inputs similar to the imported Chinese goods. Combining French accounting, customs, and patent information at the firm-level, we show that the output shock is detrimental to firms’ sales, employment and innovation. Moreover, this negative impact is concentrated on low-productivity firms. By contrast, we find a positive effect - although often not significant - of the input supply shock on firms’ sales, employment and innovation.

JEL-codes: F14 F16 F6 O31 (search for similar items in EconPapers)
Date: 2021-08
New Economics Papers: this item is included in nep-bec, nep-cna, nep-com, nep-ind, nep-ino, nep-int, nep-isf, nep-lab, nep-sbm and nep-tid
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Related works:
Working Paper: Opposing firm-level responses to the China shock: horizontal competition versus vertical relationships (2021)
Working Paper: Opposing firm-level responses to the China shock: horizontal competition versus vertical relationships (2021)
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