TY - JOUR

T1 - Intra-industry Adjustment to Import Competition

T2 - Theory and Application to the German Clothing Industry

AU - Raff, H

AU - Wagner, J

PY - 2010/8

Y1 - 2010/8

N2 - 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 average industry productivity increases due to a selection effect. 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.

AB - 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 average industry productivity increases due to a selection effect. 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.

KW - Economics

UR - http://www.scopus.com/inward/record.url?scp=77955130344&partnerID=8YFLogxK

U2 - 10.1111/j.1467-9701.2010.01310.x

DO - 10.1111/j.1467-9701.2010.01310.x

M3 - Journal articles

VL - 33

SP - 1006

EP - 1022

JO - World Economy

JF - World Economy

SN - 0378-5920

IS - 8

ER -