Essays in Firm Responses to Demand and Competition Shocks

Abstract

<p>The aim of this dissertation is to examine, model and estimate firm responses to</p><p>demand shocks by focusing on specific industries where demand shocks are well</p><p>identified. Combining reduced-form evidence and structural analysis, this dissertation</p><p>extends the economic literature by focusing on within-firm responses of firms</p><p>to two important demand shocks that are identifiable in empirical settings. First,</p><p>I focus on how firms respond to a decrease in effective demand due to competition</p><p>shocks coming from globalization. By considering China's accession to the World</p><p>Trade Organization in 2001 and its impact on the apparel industry, the aim of these</p><p>chapters is to answer how firms react to the increase in Chinese import competition,</p><p>what is the mechanism behind these responses, and how important they are in explaining</p><p>the survival of the Peruvian apparel industry. Second, I study how suppliers'</p><p>survival probability relates to the sudden disruption of their main customer-supplier</p><p>relationships with downstream manufacturers, conditional on suppliers' own idiosyncratic</p><p>characteristics such as physical productivity.</p>