Escaping Import Competition in China / Ana Cecília Fieler, Ann Harrison.

Format:

Book

Author/Creator:

Fieler, Ana Cecília.

Contributor:

National Bureau of Economic Research.

Harrison, Ann.

Series:

Working Paper Series (National Bureau of Economic Research) no. w24527.

NBER working paper series no. w24527

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2018.

Summary:

In a stylized model, firms differentiate their products to escape import com- petition. Facing a nested CES demand, each firm chooses between a nest with competitors and its own nest under higher costs. The profit from differentiation is an inverted U-shaped function of firm productivity. It increases with import competition and is lower than the social benefit. Differentiation increases the gains from trade. In establishment data from China spanning its 2001 WTO accession, tariff cuts are associated with increases in productivity, introduction of new goods, switches to skill-intensive sectors. Markups in the model explain the large increases in revenue productivity among small firms and input suppliers.

Notes:

Print version record

April 2018.