TY  - JOUR
AU  - Levinsohn,James
TI  - Testing the Imports-as-Market-Discipline Hypothesis
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 3657
PY  - 1991
Y2  - March 1991
UR  - http://www.nber.org/papers/w3657
L1  - http://www.nber.org/papers/w3657.pdf
N1  - Author contact info:
James A. Levinsohn
Yale School of Management
PO Box 208200
New Haven, CT  06520
Tel: 734/763-2319
Fax: 734/764-2769
E-Mail: James.Levinsohn@yale.edu
M2  - featured in NBER digest on 1991-07-01
AB  - It has long been believed that international competition forces domestic firms to behave more competitively. I term this the imports-as--market-discipline hypothesis. I construct a simple static oligopoly model and estimate the model using panel data from Turkish manufacturing firms. The data span the course of a dramatic trade liberalization. Looking for changes in price-marginal cost markups as trade policy shifts, I test the imports-as-market discipline hypothesis. In all five industries to which the hypothesis is relevant, markups change in the direction predicted by the theory. These changes are statistically significant in all but one of the five industries.
ER  -