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Extensive Margins of Imports and Profitability: First Evidence for Manufacturing Enterprises in Germany

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  • Wagner, Joachim

    () (Leuphana University Lueneburg and CESIS, Stockholm)

Abstract

This paper uses a tailor-made newly available data set for enterprises from manufacturing industries in Germany to investigate for the first time the links between the extensive margins of imports (the number of imported goods and the number of countries imported from) and firm profitability. While both extensive margins are highly positively linked with firm productivity, profits are not higher in firms that import more goods and from more countries. This demonstrates that productivity advantages of importers are eaten up by extra costs related to buying more goods in more countries.

Suggested Citation

  • Wagner, Joachim, 2014. "Extensive Margins of Imports and Profitability: First Evidence for Manufacturing Enterprises in Germany," Working Paper Series in Economics and Institutions of Innovation 363, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
  • Handle: RePEc:hhs:cesisp:0363
    as

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    References listed on IDEAS

    as
    1. Melitz, Marc J. & Redding, Stephen J., 2014. "Heterogeneous Firms and Trade," Handbook of International Economics, Elsevier.
    2. Joachim Wagner, 2012. "Exports, Imports and Profitability: First Evidence for Manufacturing Enterprises," Open Economies Review, Springer, vol. 23(5), pages 747-765, November.
    3. Chad Syverson, 2011. "What Determines Productivity?," Journal of Economic Literature, American Economic Association, vol. 49(2), pages 326-365, June.
    4. Andrew B. Bernard & J. Bradford Jensen & Stephen J. Redding & Peter K. Schott, 2012. "The Empirics of Firm Heterogeneity and International Trade," Annual Review of Economics, Annual Reviews, vol. 4(1), pages 283-313, July.
    5. Lucia Foster & John Haltiwanger & Chad Syverson, 2008. "Reallocation, Firm Turnover, and Efficiency: Selection on Productivity or Profitability?," American Economic Review, American Economic Association, vol. 98(1), pages 394-425, March.
    6. Mark Doms & Eric J. Bartelsman, 2000. "Understanding Productivity: Lessons from Longitudinal Microdata," Journal of Economic Literature, American Economic Association, vol. 38(3), pages 569-594, September.
    7. Alexander Vogel & Joachim Wagner, 2016. "Higher Productivity in Importing German Manufacturing Firms: Self-selection, Learning from Importing or Both?," World Scientific Book Chapters,in: Microeconometrics of International Trade, chapter 4, pages 139-174 World Scientific Publishing Co. Pte. Ltd..
    8. Schmalensee, Richard, 1989. "Inter-industry studies of structure and performance," Handbook of Industrial Organization,in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 2, chapter 16, pages 951-1009 Elsevier.
    9. Joachim Wagner, 2008. "A note on why more West than East German firms export," International Economics and Economic Policy, Springer, vol. 5(4), pages 363-370, December.
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    More about this item

    Keywords

    Imports; intensive margins; profitability; Germany;

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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