Import-push or Export-pull? An Industry-level Analysis of the Impact of Trade on Firm Exit

Ina Charlotte Jäkel ()
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Ina Charlotte Jäkel: Department of Economics and Business, Aarhus University, Postal: 8210 Aarhus V, Denmark

Economics Working Papers from Department of Economics and Business Economics, Aarhus University

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.

Keywords: Firm exit; Exports; Import competition; Heterogeneous firms (search for similar items in EconPapers)
JEL-codes: D21 F12 F15 (search for similar items in EconPapers)
Pages: 27
Date: 2013-09-18
New Economics Papers: this item is included in nep-bec, nep-cse, nep-int and nep-tid
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Persistent link: https://EconPapers.repec.org/RePEc:aah:aarhec:2013-20

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