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Import-push or Export-pull? An Industry-level Analysis of the Impact of Trade on Firm Exit

  • Ina Charlotte Jäkel


    (Department of Economics and Business, Aarhus University)

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    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.

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    Paper provided by School of Economics and Management, University of Aarhus in its series Economics Working Papers with number 2013-20.

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    Length: 27
    Date of creation: 18 Sep 2013
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    Handle: RePEc:aah:aarhec:2013-20
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