Foreign Fast Seconds and Market Contestability in Emergin Economies: Implications for Domestic Welfare
AbstractEmerging markets economies often present profitable opportunities for entry by large mutinational firms domiciled in developed economies. Such entry has the potential to bring important gains to the emerging economy consumers as well. Yet at the same time, such foreign direct investment (FDI) also poses a risk in that it will typically induce exit by domestic firms. In turn, this can result in not only the loss of profit from such firms but also lead to increased concentration and less competition with additional adverse consequences for domestic consumers. Theoretical models that investigate this possibility include Ono (1990), Richardson (1998), and Bjorvatn (2000). The question has also motivated empirical work on specific non-tradable markets in which FDI has focused, most notably, the banking sector where the introduction of large scale FDI has typically been followed by domestic firm exit and substantially increased concentration in Latin America and Central Europe. These include studies by Clarke, Cull, and Martinez Peria (2001) and Gelos and Roldos (2002), and Mkrtchyan (2005). While these studies generally find that increased concentration has been associated with price-cost margins, this is not quite the same as a determination of the impact of such entry on domestic welfare.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Department of Economics, Tufts University in its series Discussion Papers Series, Department of Economics, Tufts University with number 0730.
Date of creation: 2009
Date of revision:
Contact details of provider:
Postal: Medford, MA 02155, USA
Phone: (617) 627-3560
Fax: (617) 627-3917
Web page: http://ase.tufts.edu/econ
This paper has been announced in the following NEP Reports:
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Mary W. Sullivan, 1992. "Brand Extensions: When to Use Them," Management Science, INFORMS, vol. 38(6), pages 793-806, June.
- Curtis Eaton, B. & Schmitt, N., 1991.
"Flexible Manufacturing and Market Structure,"
1991-02, Tasmania - Department of Economics.
- Steven C. Salop, 1979. "Monopolistic Competition with Outside Goods," Bell Journal of Economics, The RAND Corporation, vol. 10(1), pages 141-156, Spring.
- Gelos, R. G. & Roldos, Jorge, 2004.
"Consolidation and market structure in emerging market banking systems,"
Emerging Markets Review,
Elsevier, vol. 5(1), pages 39-59, March.
- Gaston Gelos & Jorge Roldos, 2002. "Consolidation and Market Structure in Emerging Market Banking Systems," IMF Working Papers 02/186, International Monetary Fund.
- MacLeod, W.B. & Norman, G. & Thisse, J.-F., 1988.
"Price discrimination and equilibrium in monopolistic competition,"
International Journal of Industrial Organization,
Elsevier, vol. 6(4), pages 429-446.
- W. B. MacLeod & G. Norman & J.F. Thisse, 1987. "Price Discrimination and Equilibrium in Monopolistic Competition," Working Papers 701, Queen's University, Department of Economics.
- Macleod, W.B. & Norman, G. & Thisse, J.-F., 1985. "Price discrimination and equilibrium in monopolistic competition," CORE Discussion Papers 1985006, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- MACLEOD, W.B. & NORMAN, G. & THISSE, Jacques-François, . "Price discrimination and equilibrium in monopolistic competition," CORE Discussion Papers RP -1021, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- McLEOD, W.B. & NORMAN, G. & THISSE, J.-F., . "Price discrimination and equilibrium in monopolistic competition," CORE Discussion Papers RP -828, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Lynne Pepall & Dan Richards, 1999.
"The Simple Economics of "Brand-Stretching","
Discussion Papers Series, Department of Economics, Tufts University
9905, Department of Economics, Tufts University.
- Norman George & Pepall Lynne & Richards Daniel J, 2008. "Entrepreneurial First Movers, Brand-Name Fast Seconds, and the Evolution of Market Structure," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 8(1), pages 1-26, October.
- Clarke, George R. G. & Cull, Robert & Martinez Peria, Maria Soledad, 2001. "Does foreign bank penetration reduce access to credit in developing countries"evidence from asking borrowers," Policy Research Working Paper Series 2716, The World Bank.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Caroline Kalogeropoulos).
If references are entirely missing, you can add them using this form.