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

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  • Michele Imbruno

Abstract

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.

Suggested Citation

  • Michele Imbruno, 2014. "Trade Liberalization, Intermediate Inputs and Firm Efficiency: Direct versus Indirect Modes of Import," Discussion Papers 2014-02, University of Nottingham, GEP.
  • Handle: RePEc:not:notgep:14/02
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    File URL: http://www.nottingham.ac.uk/gep/documents/papers/2014/2014-02.pdf
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    Citations

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    Cited by:

    1. Michele Imbruno & Rosanna Pittiglio & Filippo Reganati, 2015. "FDI, Intermediate Inputs and Firm Performance: Theory and Evidence from Italy," Discussion Papers 2015-15, University of Nottingham, GEP.
    2. repec:bla:worlde:v:40:y:2017:i:12:p:2543-2563 is not listed on IDEAS
    3. Dominik Boddin & Horst Raff & Natalia Trofimenko, 2017. "Foreign ownership and the export and import propensities of developing-country firms," The World Economy, Wiley Blackwell, vol. 40(12), pages 2543-2563, December.
    4. Michele Imbruno, 2015. "Firm efficiency and Input market integration Trade versus FDI," FIW Working Paper series 154, FIW.
    5. Jung, Benjamin & Kohler, Wilhelm, 2016. "Commercial Policies in the Presence of Input-Output Linkages," Annual Conference 2016 (Augsburg): Demographic Change 145833, Verein für Socialpolitik / German Economic Association.
    6. Michele Imbruno & Tobias Ketterer, 2016. "Energy efficiency gains from trade in intermediate inputs: firm-level evidence from Indonesia," GRI Working Papers 244, Grantham Research Institute on Climate Change and the Environment.
    7. Raff, Horst & Trofimenko, Natalia, 2013. "World market access of emerging-market firms: The role of foreign ownership and access to external finance," Kiel Working Papers 1848, Kiel Institute for the World Economy (IfW).

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    Keywords

    Heterogeneous firms; Trade liberalization; Intermediate inputs; Productivity; Import-Export behaviour;

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