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Title:Intra-industry adjustment to import competition : theory and application to the German clothing industry PDF Logo
Authors:Raff, Horst
Wagner, Joachim
Issue Date:2009
Series/Report no.:CESifo working paper 2851
Abstract:This paper uses an oligopoly model with heterogeneous firms to examine how an industry adjusts to rising import competition. The model predicts that in the short run the least efficient firms in the industry become inactive, surviving firms face a fall in output, mark-ups and profits, and the average productivity of survivors increases. These pro-competitive effects of import penetration on the domestic industry disappear in the long run. The predictions for the short run are confirmed in an empirical study of the German clothing industry.
Subjects:international trade
firm heterogeneity
productivity
clothing industry
JEL:F12
F15
Document Type:Working Paper
Appears in Collections:CESifo Working Papers, CESifo Group Munich

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