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The Impact of Trade Policy on Industry Concentration in Switzerland

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  • Burghardt, Dirk

Abstract

This paper studies the impact of trade policy on industry concentration. Based on the Swiss Business Census, concentration levels for all four-digit manufacturing industries in Switzerland are calculated. Then the effect of a bilateral reduction in technical barriers to trade with the European Union is estimated. Adopting a difference-in-differences approach, it turns out that concentration in affected industries with low R&D intensity increased significantly following the policy change. This supports the notion that fewer firms are able to survive as the toughness of price competition increases. The effect on industries with high R&D intensity is found to be insignificant.

Suggested Citation

  • Burghardt, Dirk, 2013. "The Impact of Trade Policy on Industry Concentration in Switzerland," Economics Working Paper Series 1317, University of St. Gallen, School of Economics and Political Science.
    • Handle: RePEc:usg:econwp:2013:17
    as

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    File URL: http://ux-tauri.unisg.ch/RePEc/usg/econwp/EWP-1317.pdf
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Industry Concentration; Sunk Costs; R&D Expenses; Price Competition; Globalization; Trade Barriers; Natural Experiment; Plant-level Data;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F61 - International Economics - - Economic Impacts of Globalization - - - Microeconomic Impacts
    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General

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