Scandinavian Working Papers in Economics

Working Paper Series in Economics and Institutions of Innovation,
Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies

No 363: Extensive Margins of Imports and Profitability: First Evidence for Manufacturing Enterprises in Germany

Joachim Wagner ()
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Joachim Wagner: Leuphana University Lueneburg and CESIS, Stockholm, Postal: Leuphana University Lueneburg, Institute of Economics, PO Box 2440, D-21314 Lueneburg, Germany

Abstract: This paper uses a tailor-made newly available data set for enterprises from manufacturing industries in Germany to investigate for the first time the links between the extensive margins of imports (the number of imported goods and the number of countries imported from) and firm profitability. While both extensive margins are highly positively linked with firm productivity, profits are not higher in firms that import more goods and from more countries. This demonstrates that productivity advantages of importers are eaten up by extra costs related to buying more goods in more countries.

Keywords: Imports; intensive margins; profitability; Germany

JEL-codes: F14

17 pages, May 20, 2014

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