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Firm Size and the Intensive Margin of Import Demand

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  • Blaum, Joaquin
  • Lelarge, Claire
  • Peters, Michael

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

  • Blaum, Joaquin & Lelarge, Claire & Peters, Michael, 2017. "Firm Size and the Intensive Margin of Import Demand," CEPR Discussion Papers 12237, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:12237
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    References listed on IDEAS

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    1. Andrew B. Bernard & J. Bradford Jensen & Stephen J. Redding & Peter K. Schott, 2007. "Firms in International Trade," Journal of Economic Perspectives, American Economic Association, vol. 21(3), pages 105-130, Summer.
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    12. Blaum, Joaquin & Lelarge, Claire & Peters, Michael, 2016. "The Gains from Input Trade with Heterogeneous Importers," CEPR Discussion Papers 11721, C.E.P.R. Discussion Papers.
    13. Joaquin Blaum & Claire LeLarge & Michael Peters, 2015. "The Gains from Input Trade in Firm-Based Models of Importing," NBER Working Papers 21504, National Bureau of Economic Research, Inc.
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    More about this item

    Keywords

    Firm Heterogeneity; firm size; non-homothetic; trade in intermediate inputs;

    JEL classification:

    • 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
    • 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

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