Article ID: | iaor201111982 |
Volume: | 44 |
Issue: | 3 |
Start Page Number: | 991 |
End Page Number: | 1019 |
Publication Date: | Aug 2011 |
Journal: | Canadian Journal of Economics/Revue canadienne d'conomique |
Authors: | Breinlich Holger, Tucci Alessandra |
Keywords: | competition, exports, Italy, world trade |
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.