The Impact of Trade Policy on Industry Concentration in Switzerland
AbstractThis paper studies the impact of trade policy on industry concentration. Based on the Swiss Business Census, concentration levels for all four-digit manufacturing industries in Switzerland are calculated. Then the effect of a bilateral reduction in technical barriers to trade with the European Union is estimated. Adopting a difference-in-differences approach, it turns out that concentration in affected industries with low R&D intensity increased significantly following the policy change. This supports the notion that fewer firms are able to survive as the toughness of price competition increases. The effect on industries with high R&D intensity is found to be insignificant.
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Bibliographic InfoPaper provided by University of St. Gallen, School of Economics and Political Science in its series Economics Working Paper Series with number 1317.
Length: 30 pages
Date of creation: Aug 2013
Date of revision:
Industry Concentration; Sunk Costs; R&D Expenses; Price Competition; Globalization; Trade Barriers; Natural Experiment; Plant-level Data;
Find related papers by JEL classification:
- F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
- L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
- L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-09-06 (All new papers)
- NEP-COM-2013-09-06 (Industrial Competition)
- NEP-GEO-2013-09-06 (Economic Geography)
- NEP-INT-2013-09-06 (International Trade)
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