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Empirica

, Volume 41, Issue 4, pp 747–775 | Cite as

Import-push or export-pull? An industry-level analysis of the impact of trade on firm exit

  • Ina Charlotte JäkelEmail author
Original Paper

Abstract

Does the selection effect of trade work solely through competition from imports, or does the export market further contribute to firm selection? This paper provides a re-interpretation of the different mechanisms in terms of selection on profitability—rather than productivity—and derives novel predictions regarding the export market and the role of product differentiation. Empirical results for a sample of Danish manufacturing industries confirm the import-“push” hypothesis as well as the export-“pull” hypothesis, but also reveal differences across industries. The selection effect of trade is mainly driven by the “import-push” if product differentiation is high, whereas it is driven by the “export-pull” if goods are homogeneous.

Keywords

Firm exit Exports Import competition Heterogeneous firms 

JEL Classification

F12 F15 D21 

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Copyright information

© Springer Science+Business Media New York 2013

Authors and Affiliations

  1. 1.Department of Economics and BusinessAarhus UniversityAarhus VDenmark

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