Intra-industry adjustment to import competition: theory and application to the German clothing industry

Arbeitspapier

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.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IZA Discussion Papers ; No. 4434

Classification and Topics

• Classification: Wirtschaft ; Models of Trade with Imperfect Competition and Scale Economies; Fragmentation ; Economic Integration
• Subject: International trade ; firm heterogeneity ; productivity ; clothing industry ; Bekleidungsindustrie ; Internationaler Wettbewerb ; Import ; Wirtschaftliche Anpassung ; Produktivität ; Industrieller Strukturwandel ; Theorie ; Deutschland

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Raff, Horst ; Wagner, Joachim
• Event: Veröffentlichung
• (who): Institute for the Study of Labor (IZA)
• (where): Bonn
• (when): 2009

Further information

• Handle: http://hdl.handle.net/10419/35939
• URN: urn:nbn:de:101:1-200910141146
• Last update: 10.03.2025, 11:43 AM CET