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International Competition and Industrial Performance: Allocative Efficiency, Productive Efficiency, and Turbulence

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Author Info

  • Caves, Richard
  • Baldwin, John R.

Abstract

Trade exerts generally favourable effects on the performance of domestic manufacturing industries in the dimensions of allocative and productive efficiency. This paper reviews theory and recent evidence on these linkages and also explore a third effect-on the turbulence of competitive conditions and the turnover of business units. Calculations using primary census records for Canada over 1973-1992 indicate, with time and industry effect, controlled, market-share turnover, entry, exit, and mergers all increase with trade exposure. The effect is tied to market structures of differentiated products but broad international disturbances (North American Free Trade Area) also have significant effects. The normative significant of turbulence is mixed but has important positive components.

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File URL: http://www5.statcan.gc.ca/olc-cel/olc.action?ObjId=11F0019M1997108&ObjType=46&lang=en&limit=0
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Bibliographic Info

Paper provided by Statistics Canada, Analytical Studies Branch in its series Analytical Studies Branch Research Paper Series with number 1997108e.

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Date of creation: 15 Oct 1997
Date of revision:
Handle: RePEc:stc:stcp3e:1997108e

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Web page: http://www.statcan.gc.ca
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Related research

Keywords: Business adaptation and adjustment; Business performance and ownership; Current conditions; Entry; exit; mergers and growth; International trade; Trade patterns;

References

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  1. Nickell, Stephen J, 1996. "Competition and Corporate Performance," Journal of Political Economy, University of Chicago Press, vol. 104(4), pages 724-46, August.
  2. Richard E. Caves, 1992. "Industrial Efficiency in Six Nations," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262031930, December.
  3. Steven J. Davis & John C. Haltiwanger & Scott Schuh, 1998. "Job Creation and Destruction," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262540932, December.
  4. MacDonald, James M, 1994. "Does Import Competition Force Efficient Production?," The Review of Economics and Statistics, MIT Press, vol. 76(4), pages 721-27, November.
  5. Michael Spence, 1978. "Tacit Co-ordination and Imperfect Information," Canadian Journal of Economics, Canadian Economics Association, vol. 11(3), pages 490-505, August.
  6. Romer, Paul, 1994. "New goods, old theory, and the welfare costs of trade restrictions," Journal of Development Economics, Elsevier, vol. 43(1), pages 5-38, February.
  7. Baldwin,John R. & Gorecki,Paul With contributions by-Name:Caves,Richard E. With contributions by-Name:Dunne,Tim With contributions by-Name:Haltiwanger,John, 1995. "The Dynamics of Industrial Competition," Cambridge Books, Cambridge University Press, number 9780521465618, October.
    • Baldwin,John R. & Gorecki,Paul With contributions by-Name:Caves,Richard E. With contributions by-Name:Dunne,Tim With contributions by-Name:Haltiwanger,John, 1998. "The Dynamics of Industrial Competition," Cambridge Books, Cambridge University Press, number 9780521633574, October.
  8. Ian Domowitz & R. Glenn Hubbard & Bruce C. Petersen, 1986. "Business Cycles and the Relationship Between Concentration and Price-Cost Margins," RAND Journal of Economics, The RAND Corporation, vol. 17(1), pages 1-17, Spring.
  9. Robert H. McGuckin & Sang V. Nguyen, 1995. "On Productivity and Plant Ownership Change: New Evidence from the Longitudinal Research Database," RAND Journal of Economics, The RAND Corporation, vol. 26(2), pages 257-276, Summer.
  10. Yamawaki, Hideki, 1986. "Exports, Foreign Market Structure, and Profitability in Japanese and U.S. Manufacturing," The Review of Economics and Statistics, MIT Press, vol. 68(4), pages 618-27, November.
  11. Caves, Richard E., 1985. "International trade and industrial organization: Problems, solved and unsolved," European Economic Review, Elsevier, vol. 28(3), pages 377-395, August.
  12. Katics, Michelle M & Petersen, Bruce C, 1994. "The Effect of Rising Import Competition on Market Power: A Panel Data Study of U.S. Manufacturing," Journal of Industrial Economics, Wiley Blackwell, vol. 42(3), pages 277-86, September.
  13. Yamawaki, Hideki, 1991. "Exports and Foreign Distributional Activities: Evidence on Japanese Firms in the United States," The Review of Economics and Statistics, MIT Press, vol. 73(2), pages 294-300, May.
  14. Pugel, Thomas A, 1980. "Foreign Trade and US Market Performance," Journal of Industrial Economics, Wiley Blackwell, vol. 29(2), pages 119-29, December.
  15. Caves, Richard E & Porter, Michael E, 1978. "Market Structure, Oligopoly, and Stability of Market Shares," Journal of Industrial Economics, Wiley Blackwell, vol. 26(4), pages 289-313, June.
  16. Baldwin, John R., 1996. "Productivity Growth, Plant Turnover and Restructuring in the Canadian Manufacturing Sector," Analytical Studies Branch Research Paper Series 1995087e, Statistics Canada, Analytical Studies Branch.
  17. Yamawaki, Hideki & Audretsch, David B, 1988. "Import Share under International Oligopoly with Differentiated Products: Japanese Imports in U.S. Manufacturing," The Review of Economics and Statistics, MIT Press, vol. 70(4), pages 569-79, November.
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Citations

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Cited by:
  1. Robin Leichenko & Julie Silva, 2003. "International Trade, Employment, and Earnings: Evidence from U.S. Rural Counties," Working Papers 03-12, Center for Economic Studies, U.S. Census Bureau.
  2. Gu, Wulong & Sawchuk, Gary, 2006. "Comment les regions du Canada s'adaptent-elles a un marche nord-americain plus grand et plus integre?," Serie de documents de recherche sur l'analyse economique (AE) 2006039f, Statistics Canada, Direction des etudes analytiques.
  3. Gu, Wulong & Sawchuk, Gary, 2006. "How Are Canadian Regions Adjusting to a Larger and More Integrated North American Market?," Economic Analysis (EA) Research Paper Series 2006039e, Statistics Canada, Analytical Studies Branch.
  4. Michele Cincera & Olivia Galgau, 2005. "Impact of Market Entry and Exit on EU Productivity and Growth Performance," Industrial Organization 0503013, EconWPA.
  5. Xiaolan Fu, 2005. "Exports, technical progress and productivity growth in a transition economy: a non-parametric approach for China," Applied Economics, Taylor & Francis Journals, vol. 37(7), pages 725-739.
  6. Andrew Burke & Holger Görg & Aoife Hanley, 2008. "The impact of foreign direct investment on new firm survival in the UK: evidence for static versus dynamic industries," Small Business Economics, Springer, vol. 31(4), pages 395-407, December.
  7. David Laidler, 1999. "Canada's Exchange Rate Options," Canadian Public Policy, University of Toronto Press, vol. 25(3), pages 324-332, September.
  8. Fu, Xiaolan, 2004. "Limited linkages from growth engines and regional disparities in China," Journal of Comparative Economics, Elsevier, vol. 32(1), pages 148-164, March.
  9. Xiaolan Fu, 2004. "Exports, Technical Progress and Productivity Growth in Chinese Manufacturing Industries," ESRC Centre for Business Research - Working Papers wp278, ESRC Centre for Business Research.

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