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Firm Size and the Intensive Margin of Import Demand

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  • J. Blaum
  • c. Lelarge
  • M. Peters

Abstract

We use French microdata to test an ubiquitous property of firm-based models of importing. When firm efficiency is factor neutral and input prices and qualities are common across firms, firm size should have no effect on expenditure shares on the different products and varieties sourced, holding the extensive margin constant. We show that this property is not supported by the data. Holding the sourcing strategy fixed, we find that larger firms (i) have lower import shares, (ii) concentrate their import spending on their top varieties and (iii) pay higher prices for their imported inputs. Our findings imply that input trade, through the intensive margin, is less beneficial for larger firms. Our results are consistent with a complementarity between firm productivity and input quality.

Suggested Citation

  • J. Blaum & c. Lelarge & M. Peters, 2017. "Firm Size and the Intensive Margin of Import Demand," Working papers 657, Banque de France.
    • Handle: RePEc:bfr:banfra:657
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    Cited by:

    1. Joaquin BLAUM & Claire LELARGE & Michael PEETERS, 2018. "Do firms benefit equally from trade in inputs?," Rue de la Banque, Banque de France, issue 70, October.
    2. Hadrien CAMATTE & Guillaume GAULIER, 2018. "Sectoral specialisation and the downturn in France’s foreign trade between 2014 and 2016," Rue de la Banque, Banque de France, issue 71, november.
    3. Facundo Albornoz & Ezequiel García Lembergman, 2015. "Importing After Exporting," Working Papers 122, Universidad de San Andres, Departamento de Economia, revised Jul 2015.
    4. Alonso de Gortari, 2018. "Disentangling Global Value Chains," 2018 Meeting Papers 139, Society for Economic Dynamics.
    5. Emmanuel Dhyne & Ayumu Ken Kikkawa & Glenn Magerman, 2022. "Imperfect Competition in Firm-to-Firm Trade," Journal of the European Economic Association, European Economic Association, vol. 20(5), pages 1933-1970.
    6. Alonso de Gortari, 2019. "Disentangling Global Value Chains," NBER Working Papers 25868, National Bureau of Economic Research, Inc.

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    More about this item

    Keywords

    Trade in Intermediate Inputs; Firm heterogeneity; Firm size; Non-homotheticities.;
    All these keywords.

    JEL classification:

    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity

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