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Intra‐industry Adjustment to Import Competition: Theory and Application to the German Clothing Industry

Horst Raff () and Joachim Wagner ()

The World Economy, 2010, vol. 33, issue 8, 1006-1022

Abstract: This paper uses an oligopoly model with heterogeneous firms to examine how an industry adjusts to rising import competition. The model predicts that in the short run the least efficient firms in the industry become inactive, surviving firms face a fall in output, mark‐ups and profits, and average industry productivity increases due to a selection effect. These pro‐competitive effects of import penetration on the domestic industry disappear in the long run. The predictions for the short run are confirmed in an empirical study of the German clothing industry.

Date: 2010
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https://doi.org/10.1111/j.1467-9701.2010.01310.x

Related works:
Working Paper: Intra-Industry Adjustment to Import Competition: Theory and Application to the German Clothing Industry (2009) Downloads
Working Paper: Intra-Industry Adjustment to Import Competition: Theory and Application to the German Clothing Industry (2009) Downloads
Working Paper: Intra-industry adjustment to import competition: theory and application to the German clothing industry (2009) Downloads
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