Events

Economics Seminar

Author:

• Frederic Warzynski
  University of Aarhus

• Emmanuel Dhyne
  NBB, UMons

• Amil Petrin
  University of Minnesota

• Valerie Smeets
  University of Aarhus

Using detailed firm-product level quarterly data, we develop an estimation framework of a Multi-Product Production Function (MPPF) and look at the relationship between firm-product level productivity and import competition. We find that productivity at the firm level tends to react positively to increased import competition. However, multi-product firms respond differently to import competition depending on the relative importance of the product: when import competition associated to the main product of a firm increases, the firm tend to increase its efficiency in producing that core product; but increased foreign competition has a less strong for non core products of a firm. Consequently, firms tend to be more likely to drop products for which they have lower productivity, and where import competition increased. Our results are in line with recent models of multi-product firms.