Because of transportation costs, African manufacturing firms benefit from some market power on their domestic market, where they can charge a higher price than the export price, net of transportation cost. We present a simple theoretical model of an exporting firm that discriminates between the export and the domestic markets, where firms engage in Cournot competition. It is then shown that the impact of increased competition on export performance by the firms is ambiguous, and may be negative for a non trivial range of parameter values. Using survey data on Ivoirian firms, our empirical analysis gives some support to this prediction, showing that the probability of a firm exporting decreases with increased competition.
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Paper provided by Centre for the Study of African Economies, University of Oxford in its series Working Papers Series with number
2001-1.
Length: 17 pages Date of creation: 2001 Date of revision: Handle: RePEc:fth:oxesaf:2001-1
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Find related papers by JEL classification: O55 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Africa L50 - Industrial Organization - - Regulation and Industrial Policy - - - General F14 - International Economics - - Trade - - - Country and Industry Studies of Trade