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Trade Liberalization, Intermediate Inputs and Firm Efficiency: Direct versus Indirect Modes of Import

  • Michele Imbruno

This paper studies the impact of input trade liberalization on firm efficiency, aggregate productivity and welfare. We extend the Melitz (2003)’s framework to incorporate: a) trade in both intermediate inputs and final goods between similar countries, b) firm’s decision to import intermediate inputs in addition to the decision to export its final output. This model shows different effects from reducing input tariffs, according to whether intermediates are assumed to be imported directly by final good firms or indirectly through an efficient wholesale system.

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Paper provided by University of Nottingham, GEP in its series Discussion Papers with number 2014-02.

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Date of creation: 2014
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Handle: RePEc:not:notgep:14/02
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School of Economics University of Nottingham University Park Nottingham NG7 2RD

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  1. Felbermayr, Gabriel & Jung, Benjamin, 2011. "Trade intermediation and the organization of exporters," Munich Reprints in Economics 20574, University of Munich, Department of Economics.
  2. Akerman, Anders & Forslid, Rikard, 2009. "Firm Heterogeneity and Country Size Dependent Market Entry Costs," CCES Discussion Paper Series 11, Center for Research on Contemporary Economic Systems, Graduate School of Economics, Hitotsubashi University.
  3. Petia Topalova & Amit Khandelwal, 2011. "Trade Liberalization and Firm Productivity: The Case of India," The Review of Economics and Statistics, MIT Press, vol. 93(3), pages 995-1009, August.
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  8. Chevassus-Lozza, Emmanuelle & Gaigne, Carl & Le Mener, Leo, 2012. "Does input trade liberalization boost downstream firms’ exports? Theory and firm-level evidence," Working Papers 126946, Structure and Performance of Agriculture and Agri-products Industry (SPAA).
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  11. Rikard Forslid & Gianmarco I.P. Ottaviano, 2003. "An analytically solvable core-periphery model," Journal of Economic Geography, Oxford University Press, vol. 3(3), pages 229-240, July.
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  13. Di Comite, Francesco & Thisse, Jacques-François & Vandenbussche, Hylke, 2014. "Verti-zontal differentiation in export markets," Working Paper Series 1680, European Central Bank.
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  15. DI COMITE, Francesco & THISSE , Jacques & ,, 2013. "Verti-zontal differentiation in export markets," CORE Discussion Papers 2013064, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  16. Felbermayr, Gabriel J. & Jung, Benjamin, 2008. "Trade intermediaries, incomplete contracts, and the choice of export modes," Tübinger Diskussionsbeiträge 317, University of Tübingen, School of Business and Economics.
  17. Konings, Jozef & Vandenbussche, Hylke, 2005. "Antidumping protection and markups of domestic firms," Journal of International Economics, Elsevier, vol. 65(1), pages 151-165, January.
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  24. Kasahara, Hiroyuki & Lapham, Beverly, 2013. "Productivity and the decision to import and export: Theory and evidence," Journal of International Economics, Elsevier, vol. 89(2), pages 297-316.
  25. Crozet, Matthieu & Lalanne, Guy & Poncet, Sandra, 2013. "Wholesalers in international trade," European Economic Review, Elsevier, vol. 58(C), pages 1-17.
  26. Mary Amiti & Jozef G Konings, 2005. "Trade Liberalization, Intermediate Inputs, and Productivity; Evidence from Indonesia," IMF Working Papers 05/146, International Monetary Fund.
  27. Jozef Konings & Hylke Vandenbussche, 2013. "Antidumping protection hurts exporters: firm-level evidence," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 149(2), pages 295-320, June.
  28. Mark J. Gibson & Tim A. Graciano, 2011. "The Decision to Import," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 93(2), pages 444-449.
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