Trade Policy and Industrial Sector Responses: Using Evolutionary Models to Interpret the Evidence

Erkan Erdem and James Tybout

No 9947, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Firm- and plant-level empirical studies typically find that trade liberalization squeezes price-cost margins among import-competing firms, that this heightened competitive pressure induces productivity gains among these same firms, and that further efficiency gains come from market share reallocations. Using a computable industrial evolution model to simulate the dynamic effects of import competition, we demonstrate what types of managerial behavior, long-term transition paths and welfare effects are consistent with this set of stylized facts.

JEL-codes: F1 L1 (search for similar items in EconPapers)
Date: 2003-09
New Economics Papers: this item is included in nep-ino
Note: ITI PR
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Citations: View citations in EconPapers (17)

Published as Collins, S. and D. Rodrik (eds.) Brookings Trade Forum 2003. Washington, D.C.: The Brookings Institution, 2004.

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