Trade Liberalization, Intermediate Inputs and Firm Efficiency: Direct versus Indirect Modes of Import

Michele Imbruno

No 2014-02, Discussion Papers from University of Nottingham, GEP

Abstract: This paper studies the impact of input trade liberalization on firm efficiency, aggregate productivity and welfare. We extend the Melitz (2003)’s framework to incorporate: a) trade in both intermediate inputs and final goods between similar countries, b) firm’s decision to import intermediate inputs in addition to the decision to export its final output. This model shows different effects from reducing input tariffs, according to whether intermediates are assumed to be imported directly by final good firms or indirectly through an efficient wholesale system.

Keywords: Heterogeneous firms; Trade liberalization; Intermediate inputs; Productivity; Import-Export behaviour (search for similar items in EconPapers)
Date: 2014
New Economics Papers: this item is included in nep-eff and nep-int
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Citations: View citations in EconPapers (13)

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Persistent link: https://EconPapers.repec.org/RePEc:not:notgep:14/02

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