Sensitivity of Domestic Production to Import Competition: Evaluation at Different Levels of Aggregation

Eiichi Tomiura

Kobe Economic & Business Review, 2002, vol. 46, 73-90

Abstract: This paper examines the impact of import competition on domestic production by exploiting the newly constructed longitudinal firm-level monthly data of Japanese products. The firm-level estimates are compared with those based on data at different levels of aggregation (2-digit industry and 7-digit product). The results show that the aggregation effect, both through product coverage and through inter-firm heterogeneity, affects the estimates. The sensitivity of production varies substantially from firm to firm even within the same industry. By linking this intra-industry variability with domestic price differentials, this paper finds that highly sensitive to import competition is production of relatively low-priced products.

Keywords: import competition; longitudinal firm-level data; aggregation; vertical differentation (search for similar items in EconPapers)
JEL-codes: C81 D24 F14 L11 L64 (search for similar items in EconPapers)
Date: 2002
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