How Intense is Competition in International Markets of Traditional Goods? The Case of Italian Exporters
Italy continues to specialise in traditional industries. This is a source of concern for some observers who argue that this kind of specialisation overexposes Italian manufacturing to the competition of low cost producers, especially those located in emerging economies. We verify how intense the competitive pressure is on Italian exporters of traditional goods through a synthetic measure of their market power. We make use of the coincidence of the concept of relative mark up (or Lerner index), as an indicator of market power, with that of elasticity of the residual demand curve. Our findings indicate that assertions as to the excessive exposure of the Italian specialised sectors (textile, apparel, footwear, leather, ceramics, wooden furniture) to the pricing policies of competitors are questionable. Over the period considered (the 80s’ and the 90s’) Italian exporters were able to practice mark ups over marginal cost in most 304 S. de Nardis - C. Pensa of the products/markets we analysed. Only in a minority of cases did Italian exporters show no market power.
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Volume (Year): 57 (2004)
Issue (Month): 3 ()
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