Intra-Industry Adjustment to Import Competition: Theory and Application to the German Clothing Industry
This paper uses an oligopoly model with heterogeneous firms to examine how an industry adjusts to rising import competition. The model predicts that in the short run the least efficient firms in the industry become inactive, surviving firms face a fall in output, mark-ups and profits, and the average productivity of survivors increases. These pro-competitive effects of import penetration on the domestic industry disappear in the long run. The predictions for the short run are confirmed in an empirical study of the German clothing industry.
Year of publication: |
2009-09
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Authors: | Raff, Horst ; Wagner, Joachim |
Subject: | international trade | firm heterogeneity | productivity | clothing industry |
Saved in:
freely available
Extent: | application/pdf |
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Series: | Working Paper Series in Economics. - ISSN 1860-5508. |
Type of publication: | Book / Working Paper |
Language: | English |
Notes: | Number 144 27 pages |
Classification: | F12 - Models of Trade with Imperfect Competition and Scale Economies ; F15 - Economic Integration |
Source: |
Persistent link: https://www.econbiz.de/10008617003