Has Import Disciplined Swedish Manufacturing Firms in the 1990s?

This paper analyses how increased integration and the ongoing enlargement of the EU's internal market affected the performance of Swedish manufacturing firms. The pro-competitive effect of international trade, in term of intensified import competition on domestic firms' market power, has been investigated extensively at the industry-level. In contrast to previous studies, this analysis is based on detailed firm-level information and import data divided into both an EU member group and a group of recently approved EU member candidates. It focuses on how imports from these groups, together with imports from other non-European trading partners, impact on firm-level profitability, while taking firm-specific efficiency effects into account. The findings are that imports from the new EU-candidates, Japan and Asian newly industrialized countries seem to have a disciplinary effect on firm-level profits, whereas imports from EU-member countries only appear to have an impact on firms with large market shares and in highly concentrated industries.