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Trade Policy and Industrial Sector Responses: Using Evolutionary Models to Interpret the Evidence

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  • Erkan Erdem
  • James Tybout

Abstract

Firm- and plant-level empirical studies typically find that trade liberalization squeezes price-cost margins among import-competing firms, that this heightened competitive pressure induces productivity gains among these same firms, and that further efficiency gains come from market share reallocations. Using a computable industrial evolution model to simulate the dynamic effects of import competition, we demonstrate what types of managerial behavior, long-term transition paths and welfare effects are consistent with this set of stylized facts.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 9947.

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Date of creation: Sep 2003
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Publication status: published as Collins, S. and D. Rodrik (eds.) Brookings Trade Forum 2003. Washington, D.C.: The Brookings Institution, 2004.
Handle: RePEc:nbr:nberwo:9947

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  17. Levinsohn, James, 1999. "Employment responses to international liberalization in Chile," Journal of International Economics, Elsevier, vol. 47(2), pages 321-344, April.
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Cited by:
  1. Asaftei, Gabriel & Parmeter, Christopher F., 2010. "Market power, EU integration and privatization: The case of Romania," Journal of Comparative Economics, Elsevier, vol. 38(3), pages 340-356, September.
  2. Bas, Maria & Strauss-Kahn, Vanessa, 2010. "Does importing more inputs raise exports? Firm level evidence from France," MPRA Paper 27315, University Library of Munich, Germany.
  3. Ulrich Doraszelski & Kenneth L. Judd, 2005. "Avoiding the Curse of Dimensionality in Dynamic Stochastic Games," NBER Technical Working Papers 0304, National Bureau of Economic Research, Inc.
  4. Amurgo-Pacheco, Alberto & Pierola, Martha Denisse, 2008. "Patterns of export diversification in developing countries : intensive and extensive margins," Policy Research Working Paper Series 4473, The World Bank.
  5. Thierry Verdier, 2005. "Intégration commerciale « socialement responsable » : une approche en termes d'économie politique," Revue d’économie du développement, De Boeck Université, vol. 19(4), pages 55-121.
  6. Berhanu Abegaz & Arnab K. Basu, 2011. "The Elusive Productivity Effect of Trade Liberalization in the Manufacturing Industries of Emerging Economies," Emerging Markets Finance and Trade, M.E. Sharpe, Inc., vol. 47(1), pages 5-27, January.
  7. Rafaelita M. Aldaba, 2005. "The Impact of Market Reforms on Competition, Structure and Performance of the Philippine Economy," Trade Working Papers 22306, East Asian Bureau of Economic Research.

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