Department of Economics and Business Economics

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

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  • wp13_20

    Submitted manuscript, 794 KB, PDF document

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 languageEnglish
Place of publicationAarhus
PublisherInstitut for Økonomi, Aarhus Universitet
Number of pages28
Publication statusPublished - 18 Sep 2013
SeriesEconomics Working Papers
Number2013-20

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