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Trade Liberalization, Intermediate Inputs and Firm Efficiency: Direct versus Indirect Modes of Import

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  • Michele Imbruno

Abstract

This paper studies the impact of input trade liberalization on firm efficiency, aggregate productivity and welfare. We extend the Melitz (2003)’s framework to incorporate: a) trade in both intermediate inputs and final goods between similar countries, b) firm’s decision to import intermediate inputs in addition to the decision to export its final output. This model shows different effects from reducing input tariffs, according to whether intermediates are assumed to be imported directly by final good firms or indirectly through an efficient wholesale system.

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File URL: http://www.nottingham.ac.uk/gep/documents/papers/2014/2014-02.pdf
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Bibliographic Info

Paper provided by University of Nottingham, GEP in its series Discussion Papers with number 2014-02.

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Date of creation: 2014
Date of revision:
Handle: RePEc:not:notgep:14/02

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Postal: School of Economics University of Nottingham University Park Nottingham NG7 2RD
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Fax: (0115) 951 4159
Web page: http://www.nottingham.ac.uk/gep/index.aspx
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Keywords: Heterogeneous firms; Trade liberalization; Intermediate inputs; Productivity; Import-Export behaviour;

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References

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Cited by:
  1. Horst Raff & Natalia Trofimenko, 2013. "World Market Access of Emerging-Market Firms: The Role of Foreign Ownership and Access to External Finance," CESifo Working Paper Series 4346, CESifo Group Munich.

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