Import-push or export-pull? An industry-level analysis of the impact of trade on firm exit

Ina Jäkel ()

Empirica, 2014, vol. 41, issue 4, 747-775

Abstract: Does the selection effect of trade work solely through competition from imports, or does the export market further contribute to firm selection? This paper provides a re-interpretation of the different mechanisms in terms of selection on profitability—rather than productivity—and derives novel predictions regarding the export market and the role of product differentiation. Empirical results for a sample of Danish manufacturing industries confirm the import-“push” hypothesis as well as the export-“pull” hypothesis, but also reveal differences across industries. The selection effect of trade is mainly driven by the “import-push” if product differentiation is high, whereas it is driven by the “export-pull” if goods are homogeneous. Copyright Springer Science+Business Media New York 2014

Keywords: Firm exit; Exports; Import competition; Heterogeneous firms; F12; F15; D21 (search for similar items in EconPapers)
Date: 2014
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DOI: 10.1007/s10663-013-9235-x

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