Foreign Presence and Market Concentration: The Case of Portuguese Manufacturing Industries
AbstractThe impact of foreign direct investment (FDI) on host country market concentration has been a controversial issue, both at the theoretical and the empirical levels. Most existing empirical studies point to a positive relationship, enhancing the negative effects of FDI on competition conditions, but there are also studies that support the argument that FDI reinforces competition. In this paper we analyze the impact of FDI on market concentration considering the Portuguese manufacturing industries in the period 2006-2009. Using panel data estimation we found a significant negative impact of FDI on industry concentration, which is in line with the results of other studies for developed countries, and gives support to arguments that FDI has positive effects on domestic firms, eventually through positive externalities.
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Bibliographic InfoPaper provided by Universidade do Porto, Faculdade de Economia do Porto in its series FEP Working Papers with number 444.
Length: 19 pages
Date of creation: Feb 2012
Date of revision:
Foreign Direct Investment; Market Concentration; Panel Data;
Find related papers by JEL classification:
- F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
- L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
- L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
- C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
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