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Foreign market conditions and export performance: does `crowdedness' reduce exports?

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  • Holger Breinlich
  • Alessandra Tucci

Abstract

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.

Suggested Citation

  • Holger Breinlich & Alessandra Tucci, 2011. "Foreign market conditions and export performance: does `crowdedness' reduce exports?," Canadian Journal of Economics, Canadian Economics Association, vol. 44(3), pages 991-1019, August.
  • Handle: RePEc:cje:issued:v:44:y:2011:i:3:p:991-1019
    DOI: 10.1111/j.1540-5982.2011.01663.x
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    3. Crafts, Nicholas, 2012. "Western Europe's Growth Prospects: an Historical Perspective," CEPR Discussion Papers 8827, C.E.P.R. Discussion Papers.
    4. Yang, Yong & Mallick, Sushanta, 2014. "Explaining cross-country differences in exporting performance: The role of country-level macroeconomic environment," International Business Review, Elsevier, vol. 23(1), pages 246-259.

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    More about this item

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F15 - International Economics - - Trade - - - Economic Integration

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