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Import-push or export-pull? An industry-level analysis of the impact of trade on firm exit

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  • Ina Jäkel

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. Copyright Springer Science+Business Media New York 2014

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  • Ina Jäkel, 2014. "Import-push or export-pull? An industry-level analysis of the impact of trade on firm exit," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 41(4), pages 747-775, November.
    • Handle: RePEc:kap:empiri:v:41:y:2014:i:4:p:747-775
    DOI: 10.1007/s10663-013-9235-x
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    More about this item

    Keywords

    Firm exit; Exports; Import competition; Heterogeneous firms; F12; F15; D21;
    All these keywords.

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F15 - International Economics - - Trade - - - Economic Integration
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory

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