@article{d4810772e88d44d39df0953a0aa3dd36,
title = "The network effect of Chinese competition on what domestic suppliers produce",
abstract = "When a sector suffers a reduction in the demand for its products, its suppliers are also affected. This paper shows that when demand for a product falls, there is a decline in the number of domestic plants producing inputs for that good. This result is obtained using data from Chilean manufacturing during the 1995–2006 period, using the increase in Chinese penetration as a demand shock. Using plant-product level data, I find that the observed effect on the number of suppliers is explained by multi-product plants dropping varieties, especially small plants, low-productivity plants and low-markup varieties. This is an intuitive but previously unobserved network effect through which import competition may have a productivity-enhancing effect.",
keywords = "China shock, Demand shocks, Import competition, Input-output, Multi-product firms, Product mix, Production networks, Propagation of shocks",
author = "{GOYA LEON}, {DANIEL IGNACIO}",
note = "Funding Information: I would like to thank Vasco Carvalho, Giancarlo Corsetti, David Dorn, Jos{\'e} Miguel Benavente, Matt Elliott, Meredith Crowley, Beata Javorcik, Gabriella Santangelo, Andr{\'e}s Zahler, Nicol{\'a}s P{\'a}ez, John Spray, Lu Han, Rodrigo Vald{\'e}s, the editor, Angus C. Chu, and three anonymous reviewers for their helpful comments and suggestions, as well as seminar participants at PhD workshops in Cambridge and at Universidad de Chile, Universidad Adolfo Ib{\'a}{\~n}ez, Universidad de Santiago, LACEA 2017 and SECHI 2018. I especially thank David Baqaee for his detailed comments on an earlier draft. Finally, I gratefully acknowledge financial support from the Chilean National Agency for Research and Development ANID (Becas Chile 79090016), and the Faculty of Economics and Clare Hall in Cambridge. All remaining errors are my own. Funding Information: I would like to thank Vasco Carvalho, Giancarlo Corsetti, David Dorn, Jos? Miguel Benavente, Matt Elliott, Meredith Crowley, Beata Javorcik, Gabriella Santangelo, Andr?s Zahler, Nicol?s P?ez, John Spray, Lu Han, Rodrigo Vald?s, the editor, Angus C. Chu, and three anonymous reviewers for their helpful comments and suggestions, as well as seminar participants at PhD workshops in Cambridge and at Universidad de Chile, Universidad Adolfo Ib??ez, Universidad de Santiago, LACEA 2017 and SECHI 2018. I especially thank David Baqaee for his detailed comments on an earlier draft. Finally, I gratefully acknowledge financial support from the Chilean National Agency for Research and Development ANID (Becas Chile 79090016), and the Faculty of Economics and Clare Hall in Cambridge. All remaining errors are my own. Publisher Copyright: {\textcopyright} 2021 Elsevier B.V.",
year = "2021",
month = sep,
doi = "10.1016/j.econmod.2021.105544",
language = "English",
volume = "102",
journal = "Economic Modelling",
issn = "0264-9993",
}