The Impact of Trade Policy on Industry Concentration in Switzerland

Dirk Burghardt

No 1317, Economics Working Paper Series from University of St. Gallen, School of Economics and Political Science

Abstract: This paper studies the impact of trade policy on industry concentration. Based on the Swiss Business Census, concentration levels for all four-digit manufacturing industries in Switzerland are calculated. Then the effect of a bilateral reduction in technical barriers to trade with the European Union is estimated. Adopting a difference-in-differences approach, it turns out that concentration in affected industries with low R&D intensity increased significantly following the policy change. This supports the notion that fewer firms are able to survive as the toughness of price competition increases. The effect on industries with high R&D intensity is found to be insignificant.

Keywords: Industry Concentration; Sunk Costs; R&D Expenses; Price Competition; Globalization; Trade Barriers; Natural Experiment; Plant-level Data (search for similar items in EconPapers)
JEL-codes: F13 F61 L10 L60 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2013-08
New Economics Papers: this item is included in nep-com, nep-geo and nep-int
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Persistent link: https://EconPapers.repec.org/RePEc:usg:econwp:2013:17

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