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From Selling Goods to Selling Services: Firm Responses to Trade Liberalization

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  • Holger Breinlich
  • Anson Soderbery
  • Greg C. Wright

Abstract

In the face of trade liberalization domestic firms are often forced out of the market, whereas others adapt and survive. In this paper we focus on a new channel of adaptation, namely the shift toward increased provision of services in lieu of goods production. We exploit variation in EU trade policy to show that lower manufacturing tariffs cause firms to shift into services provision and out of goods production. We find that a successful transition is associated with higher firm-level R&D stocks.

Suggested Citation

  • Holger Breinlich & Anson Soderbery & Greg C. Wright, 2016. "From Selling Goods to Selling Services: Firm Responses to Trade Liberalization," Discussion Papers 2016-07, University of Nottingham, GEP.
    • Handle: RePEc:not:notgep:16/07
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    References listed on IDEAS

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    More about this item

    Keywords

    Services Trade; Trade Liberalization; Import Competition;
    All these keywords.

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F15 - International Economics - - Trade - - - Economic Integration
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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