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

Ina Charlotte Jäkel

doi:10.1007/s10663-013-9235-x

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

Research output: Contribution to journal/Conference contribution in journal/Contribution to newspaper › Journal article › Research › peer-review

3 Citations (Scopus)

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.

Original language	English
Journal	Empirica
Pages (from-to)	747-775
Number of pages	29
ISSN	0340-8744
DOIs	https://doi.org/10.1007/s10663-013-9235-x
Publication status	Published - 2014

Keywords

Firm exit
Exports
Import competition
Heterogeneous firms

Access to Document

10.1007/s10663-013-9235-x

http://link.springer.com/article/10.1007%2Fs10663-013-9235-x

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Cite this

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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.",

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N2 - 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.

AB - 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.

KW - Firm exit

KW - Exports

KW - Import competition

KW - Heterogeneous firms

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