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Foreign market conditions and export performance: does ‘crowdedness’ reduce exports?

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  • Holger Breinlich
  • Alessandra Tucci
Abstract
This paper analyzes the link between firm exports and the competitive environment in foreign markets. We derive a theory‐based econometric specification linking market‐specific exports to foreign demand and the degree of a market’s ‘crowdedness,’ which depends on the number and efficiency of firms competing there and the barriers impeding their access. Estimates on a large sample of Italian firms indicate that increased crowdedness has reduced Italian exports, but only by 0.2%–0.3% per year. This is substantially less than the contribution of other factors such as higher unit labour costs or weak demand growth in the EU15. Ce texte analyse le lien entre les exportations d’une firme et l’environnement concurrentiel dans les marchés étrangers. On dérive une spécification économétrique théoriquement fondée qui lie les exportations spécifiques à un marchéà la demande étrangère et au degré d’encombrement de ce marché (lequel dépend du nombre et de l’efficacité des firmes qui se concurrencent sur ce marché, et des barrières qui en bloquent l’accès). Des estimations à partir d’un grand échantillon de firmes italiennes montrent qu’un encombrement accru a réduit les exportations italiennes de seulement 0.2%à 0.3% par année. Voilà qui est substantiellement moindre que l’effet d’autres facteurs comme les coûts unitaires de travail plus élevés ou la faible croissance de la demande dans le marché principal que constitue la communauté européenne des 15.

Suggested Citation

  • Holger Breinlich & Alessandra Tucci, 2011. "Foreign market conditions and export performance: does ‘crowdedness’ reduce exports?," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 44(3), pages 991-1019, August.
    • Handle: RePEc:wly:canjec:v:44:y:2011:i:3:p:991-1019
    DOI: 10.1111/j.1540-5982.2011.01663.x
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    Cited by:

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    2. Crafts, Nicholas, 2013. "Long-Term Growth in Europe: What Difference does the Crisis Make?," National Institute Economic Review, National Institute of Economic and Social Research, vol. 224, pages 14-28, May.
    3. Nicholas Crafts & Marco Magnani, 2011. "The Golden Age and the Second Globalization in Italy," Quaderni di storia economica (Economic History Working Papers) 17, Bank of Italy, Economic Research and International Relations Area.
    4. Elisabeth Christen & Michael Pfaffermayr & Yvonne Wolfmayr, 2019. "Decomposing service exports adjustments along the intensive and extensive margin at the firm‐level," Review of International Economics, Wiley Blackwell, vol. 27(1), pages 155-183, February.
    5. Crafts, Nicholas, 2012. "Western Europe's Growth Prospects: an Historical Perspective," CEPR Discussion Papers 8827, C.E.P.R. Discussion Papers.
    6. Yang, Yong & Mallick, Sushanta, 2014. "Explaining cross-country differences in exporting performance: The role of country-level macroeconomic environment," International Business Review, Elsevier, vol. 23(1), pages 246-259.

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    More about this item

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F15 - International Economics - - Trade - - - Economic Integration

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