Trade Policy and Industrial Sector Responses: Using Evolutionary Models to Interpret the Evidence

37 Pages Posted: 9 Sep 2003 Last revised: 7 Sep 2022

See all articles by Erkan Erdem

Erkan Erdem

Pennsylvania State University, College of the Liberal Arts - Department of Economic

James Tybout

Pennsylvania State University - Department of Economics; National Bureau of Economic Research (NBER)

Date Written: September 2003

Abstract

Firm- and plant-level empirical studies typically find that trade liberalization squeezes price-cost margins among import-competing firms, that this heightened competitive pressure induces productivity gains among these same firms, and that further efficiency gains come from market share reallocations. Using a computable industrial evolution model to simulate the dynamic effects of import competition, we demonstrate what types of managerial behavior, long-term transition paths and welfare effects are consistent with this set of stylized facts.

Suggested Citation

Erdem, Erkan and Tybout, James R., Trade Policy and Industrial Sector Responses: Using Evolutionary Models to Interpret the Evidence (September 2003). NBER Working Paper No. w9947, Available at SSRN: https://ssrn.com/abstract=441580

Erkan Erdem

Pennsylvania State University, College of the Liberal Arts - Department of Economic ( email )

517 Kern Graduate Building
University Park, PA 16802-3306
United States

James R. Tybout (Contact Author)

Pennsylvania State University - Department of Economics ( email )

517 Kern Graduate Building
University Park, PA 16802-3306
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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