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Import Liberation, Competition and Firm' Total Factor Productivity
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TitleImport Liberation, Competition and Firm' Total Factor Productivity  
AuthorJian Ze, Zhang Tao and Fu Yulin  
OrganizationSchool of Economics and Management, Tongji University,School of Economics, Fudan University,School of Business, East China University of Science and Technology,,yulinfu@126. com 
Key WordsImport Liberation; Competition; Incentive Effects; Economies of Scale; TFP 
AbstractUtilizing a natural experiment, this paper investigates the effects on firm' TFP of the import competition intensified after access to WTO. We find that import liberalization enhances external competitive pressures faced by the local enterprise. Then we obtain three key results: (1) On average, import competition promotes the growth of total factor productivity of local enterprises; (2) It hinders the growth of total factor productivity of low productivity enterprises, but pushes the growth of total factor productivity of high productivity enterprises. Thus, import competition has a different impact on heterogeneous enterprises; (3) For those enterprises with lower TFP, negative scale effects of dominates over positive incentive effects, and import competition hinders their TFP growth. On the contrary, for those enterprises with higher TFP, positive incentive effects of dominates over negative scale effects, and import competition pushes their TFP growth. These results disclose a new source of the growth of firm' TFP, and reconcile two opposing theoretical hypotheses. 
Serial NumberWP566 
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