IDEAS home Printed from
MyIDEAS: Log in (now much improved!) to save this paper

Globalization and Firm Exit: Differences Between Small and Large Firms

Listed author(s):
  • Colantone, Italo

    (Erasmus University Rotterdam)

  • Coucke, Kristien


    (Hogeschool-Universiteit Brussel (HUB), Belgium)

  • Sleuwaegen, Leo


    (KU Leuven and Vlerick Leuven Gent Management School)

The effects of increasing import competition on the exit of heterogeneous domestic fi?rms are investigated, both at the theoretical and empirical level. Within the context of an oligopolistic rivalry model, marginal cost fl?exibility and product differentiation with respect to the imported goods are shown to lower the displacement effect from international competition, thus helping fi?rms to survive. Both results point to small fi?rms as being in a relatively favourable position with respect to their larger competitors, as industries adjust to increasing import penetration. These ?findings are consistent with empirical evidence on fi?rm exit for 12 manufacturing sectors in 8 European countries, from 1997 to 2003. In particular, the exit of large fi?rms is found to be sensitive to the shock of soaring import penetration from low-wage countries. Small fi?rms in the same industries are instead only affected by marginal trade integration with respect to neighbouring EU countries and other relatively wealthy trading partners. Hence this paper shows, for the ?first time, that fi?rms of different size might be affected differently by diverse sources of import competition. Implications on fi?rm strategic planning and public policy are discussed.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL:
Download Restriction: no

Paper provided by Hogeschool-Universiteit Brussel, Faculteit Economie en Management in its series Working Papers with number 2010/19.

in new window

Length: 30 page
Date of creation: May 2010
Handle: RePEc:hub:wpecon:201019
Contact details of provider: Web page:

More information through EDIRC

No references listed on IDEAS
You can help add them by filling out this form.

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:hub:wpecon:201019. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sabine Janssens)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.