Import Competition and Product Churning: Evidence from Japanese Plant-product-level Data

Author Name Flora BELLONE (Université Côte d' Azur) / Cilem Selin HAZIR (Leibniz Institute of Ecological Urban and Regional Development) / MATSUURA Toshiyuki (Keio University)
Creation Date/NO. September 2019 19-E-074
Research Project A Study of the Effects of Trade Policy: A microdata analysis of Japan from the 1990s to 2010s
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This study examines how Japanese firms change their product portfolios in response to surges of imports from China. Using the comprehensive Japanese plant-product level panel data set, we examine the impact of import competition on their product churning behavior. We found that the import competition pressures do affect the product churning for multi-product plants. However, the negative effects of import competition are mitigated by increased export opportunities. This effect is more pronounced especially in the years before 2008. However, their impact on plant-level reallocation is somewhat limited. Negative effects on plant-level sales and exit behavior are observed only for single-product plants.