Does import competition drive productivity growth? Evidence from Hungary’s pre-accession import tariffs

Abstract This paper studies the effect of increased competition from imports on productivity firms. It proposes an empirical model that estimates sales revenue. The addresses concerns associated with unobserved prices and demand conditions in revenue productivity. Unlike De Loecker (Econometrica 79(5):1407–1451, 2011), builds recent evidence exporting firm-level by distinguishing between export domestic markets integrating both supply function applies this framework to study tariffs reduction EU had efficiency manufacturing firms Hungary during period 1996–2003, finds a 10-percentage point import similar products manufactured firm raises firm’s 1.40%. is contrast 2.35% when used. proposed provides simple improves data.