IDEAS home Printed from https://ideas.repec.org/p/cpr/ceprdp/6871.html
   My bibliography  Save this paper

Domestic Rivalry and Export Performance: Theory and Evidence from International Airline Markets

Author

Listed:
  • Clougherty, Joseph A.
  • Zhang, Anming

Abstract

The much-studied relationship between domestic rivalry and export performance consists of those supporting a national-champion rationale, and those supporting a rivalry rationale. While the empirical literature generally supports the positive effects of domestic rivalry, the national-champion rationale actually rests on firmer theoretical ground. We address this inconsistency by providing a theoretical framework that illustrates three paths via which domestic rivalry translates into enhanced international exports. Furthermore, empirical tests on the world airline industry elicit the existence of one particular path – an enhanced firm performance effect – that connects domestic rivalry with improved international exports.

Suggested Citation

  • Clougherty, Joseph A. & Zhang, Anming, 2008. "Domestic Rivalry and Export Performance: Theory and Evidence from International Airline Markets," CEPR Discussion Papers 6871, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:6871
    as

    Download full text from publisher

    File URL: http://www.cepr.org/active/publications/discussion_papers/dp.php?dpno=6871
    Download Restriction: CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Brander, James & Krugman, Paul, 1983. "A 'reciprocal dumping' model of international trade," Journal of International Economics, Elsevier, vol. 15(3-4), pages 313-321, November.
    2. Hansen, Lars Peter, 1982. "Large Sample Properties of Generalized Method of Moments Estimators," Econometrica, Econometric Society, vol. 50(4), pages 1029-1054, July.
    3. Nicholas Bloom & John Van Reenen, 2007. "Measuring and Explaining Management Practices Across Firms and Countries," The Quarterly Journal of Economics, Oxford University Press, vol. 122(4), pages 1351-1408.
    4. Horn, Henrik & Levinsohn, James, 2001. "Merger Policies and Trade Liberalisation," Economic Journal, Royal Economic Society, vol. 111(470), pages 244-276, April.
    5. Parsons, Donald O & Ray, Edward John, 1975. "The United States Steel Consolidation: The Creation of Market Control," Journal of Law and Economics, University of Chicago Press, vol. 18(1), pages 181-219, April.
    6. Brander, James A. & Zhang, Anming, 1993. "Dynamic oligopoly behaviour in the airline industry," International Journal of Industrial Organization, Elsevier, vol. 11(3), pages 407-435, September.
    7. Severin Borenstein, 1992. "The Evolution of U.S. Airline Competition," Journal of Economic Perspectives, American Economic Association, vol. 6(2), pages 45-73, Spring.
    8. Joseph A. Clougherty, 2006. "The international drivers of domestic airline mergers in twenty nations: integrating industrial organization and international business," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 27(1), pages 75-93.
    9. White, Lawrence J, 1974. "Industrial Organization and International Trade: Some Theoretical Considerations," American Economic Review, American Economic Association, vol. 64(6), pages 1013-1020, December.
    10. Victor D. Norman & Siri Strandenes, 1994. "Deregulation of Scandinavian Airlines: A Case Study of the Oslo-Stockholm Route," NBER Chapters,in: Empirical Studies of Strategic Trade Policy, pages 85-100 National Bureau of Economic Research, Inc.
    11. David R. Graham & Daniel P. Kaplan & David S. Sibley, 1983. "Efficiency and Competition in the Airline Industry," Bell Journal of Economics, The RAND Corporation, vol. 14(1), pages 118-138, Spring.
    12. Hausman, Jerry, 2015. "Specification tests in econometrics," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 38(2), pages 112-134.
    13. Stephen W. Salant & Sheldon Switzer & Robert J. Reynolds, 1983. "Losses From Horizontal Merger: The Effects of an Exogenous Change in Industry Structure on Cournot-Nash Equilibrium," The Quarterly Journal of Economics, Oxford University Press, vol. 98(2), pages 185-199.
    14. Blundell, Richard & Bond, Stephen, 1998. "Initial conditions and moment restrictions in dynamic panel data models," Journal of Econometrics, Elsevier, vol. 87(1), pages 115-143, August.
    15. Clougherty, Joseph A., 2002. "US domestic airline mergers: the neglected international determinants," International Journal of Industrial Organization, Elsevier, vol. 20(4), pages 557-576, April.
    16. Joseph Clougherty & Anming Zhang, 2005. "Export orientation and domestic merger policy: theory and some empirical evidence," Canadian Journal of Economics, Canadian Economics Association, vol. 38(3), pages 778-806, August.
    17. Ng, Charles K & Seabright, Paul, 2001. "Competition, Privatisation and Productive Efficiency: Evidence from the Airline Industry," Economic Journal, Royal Economic Society, vol. 111(473), pages 591-619, July.
    18. Brueckner, Jan K. & Spiller, Pablo T., 1991. "Competition and mergers in airline networks," International Journal of Industrial Organization, Elsevier, vol. 9(3), pages 323-342, September.
    19. Bulow, Jeremy I & Geanakoplos, John D & Klemperer, Paul D, 1985. "Multimarket Oligopoly: Strategic Substitutes and Complements," Journal of Political Economy, University of Chicago Press, vol. 93(3), pages 488-511, June.
    20. Barros, Pedro P. & Cabral, Luis, 1994. "Merger policy in open economies," European Economic Review, Elsevier, vol. 38(5), pages 1041-1055, May.
    21. Stephen Martin, 1999. "Trade and Competition: An Industrial Economist's Perspective," The World Economy, Wiley Blackwell, vol. 22(6), pages 895-907, August.
    22. Zhang, Anming & Zhang, Yimin, 1996. "Stability of a Cournot-Nash equilibrium: The multiproduct case," Journal of Mathematical Economics, Elsevier, vol. 26(4), pages 441-462.
    23. Steffen Huck & Kai A. Konrad, 2004. "Merger Profitability and Trade Policy," Scandinavian Journal of Economics, Wiley Blackwell, vol. 106(1), pages 107-122, March.
    24. Ray, Edward John, 1981. "Tariff and Nontariff Barriers to Trade in the United States and Abroad," The Review of Economics and Statistics, MIT Press, vol. 63(2), pages 161-168, May.
    25. Morrison, Steven A & Winston, Clifford, 1987. "Empirical Implications and Tests of the Contestability Hypothesis," Journal of Law and Economics, University of Chicago Press, vol. 30(1), pages 53-66, April.
    26. Jen Baggs & Jean-Etienne De Bettignies, 2007. "PRODUCT MARKET COMPETITION AND AGENCY COSTS -super-," Journal of Industrial Economics, Wiley Blackwell, vol. 55(2), pages 289-323, June.
    27. Brueckner, Jan K & Spiller, Pablo T, 1994. "Economies of Traffic Density in the Deregulated Airline Industry," Journal of Law and Economics, University of Chicago Press, vol. 37(2), pages 379-415, October.
    28. Brander, James A., 1981. "Intra-industry trade in identical commodities," Journal of International Economics, Elsevier, vol. 11(1), pages 1-14, February.
    29. Tae Hoon Oum & Anming Zhang & Yimin Zhang, 1995. "Airline Network Rivalry," Canadian Journal of Economics, Canadian Economics Association, vol. 28(4a), pages 836-857, November.
    30. Mariko Sakakibara & Michael E. Porter, 2001. "Competing At Home To Win Abroad: Evidence From Japanese Industry," The Review of Economics and Statistics, MIT Press, vol. 83(2), pages 310-322, May.
    31. Nickell, Stephen J, 1996. "Competition and Corporate Performance," Journal of Political Economy, University of Chicago Press, vol. 104(4), pages 724-746, August.
    32. Dixit, Avinash, 1984. "International Trade Policy for Oligopolistic Industries," Economic Journal, Royal Economic Society, vol. 94(376a), pages 1-16, Supplemen.
    33. Brander, James A. & Spencer, Barbara J., 1985. "Export subsidies and international market share rivalry," Journal of International Economics, Elsevier, vol. 18(1-2), pages 83-100, February.
    34. James A. Brander & Anming Zhang, 1990. "Market Conduct in the Airline Industry: An Empirical Investigation," RAND Journal of Economics, The RAND Corporation, vol. 21(4), pages 567-583, Winter.
    35. Marvel, Howard P, 1980. "Foreign Trade and Domestic Competition," Economic Inquiry, Western Economic Association International, vol. 18(1), pages 103-122, January.
    36. Manuel Arellano & Stephen Bond, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," Review of Economic Studies, Oxford University Press, vol. 58(2), pages 277-297.
    37. Aidan Hollis, 2003. "Industrial Concentration, Output, and Trade: An Empirical Exploration," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 22(2), pages 103-119, March.
    38. Windmeijer, Frank, 2005. "A finite sample correction for the variance of linear efficient two-step GMM estimators," Journal of Econometrics, Elsevier, vol. 126(1), pages 25-51, May.
    39. Chou, Tein-Chen, 1986. "Concentration, Profitability and Trade in a Simultaneous Equation Analysis: The Case of Taiwan," Journal of Industrial Economics, Wiley Blackwell, vol. 34(4), pages 429-443, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Kate Hynes & Eric Evans Osei Opoku & Isabel K. M. Yan, 2017. "Reaching Up and Reaching Out: The Impact of Competition on Firms’ Productivity and Export Decisions," Working Papers 201719, School of Economics, University College Dublin.
    2. Daniela Federici & Valentino Parisi, 2012. "Corporate Taxation and Exports," Working Papers 2012-01, Universita' di Cassino, Dipartimento di Scienze Economiche.
    3. Richard Harris & John Moffat, 2011. "R&D, Innovation and Exporting," SERC Discussion Papers 0073, Spatial Economics Research Centre, LSE.
    4. Maria Bramati & Alberto Gaggero & Edna Solomon, 2015. "International Trade and Domestic Competition: Evidence from Belgium," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 46(4), pages 383-399, June.
    5. See, Kok Fong & Abdul Rashid, Azwan, 2016. "Total factor productivity analysis of Malaysia Airlines: Lessons from the past and directions for the future," Research in Transportation Economics, Elsevier, vol. 56(C), pages 42-49.
    6. repec:eee:inecon:v:107:y:2017:i:c:p:147-164 is not listed on IDEAS
    7. Ohashi, Hiroshi & Toyama, Yuta, 2017. "The effects of domestic merger on exports: A case study of the 1998 Korean automobile industry," Journal of International Economics, Elsevier, vol. 107(C), pages 147-164.
    8. Németh, Adél & Niemeier, Hans-Martin, 2012. "Airline mergers in Europe – An overview on the market definition of the EU commission," Journal of Air Transport Management, Elsevier, vol. 22(C), pages 45-52.
    9. Tanja Goodwin & Martha Denisse Pierola, 2015. "Export Competitiveness," World Bank Other Operational Studies 23658, The World Bank.
    10. Daniela Federici & Valentino Parisi, 2014. "Corporate Taxation and Exports: Evidence from Italian Firm-Level Data," Review of Economics & Finance, Better Advances Press, Canada, vol. 4, pages 23-38, May.
    11. repec:eee:jaitra:v:64:y:2017:i:pa:p:15-20 is not listed on IDEAS
    12. Fu, Xiaowen & Oum, Tae Hoon & Chen, Ruowei & Lei, Zheng, 2015. "Dominant carrier performance and international liberalization – The case of Northeast Asia," Transport Policy, Elsevier, vol. 43(C), pages 61-75.
    13. Marjit, Sugata & Ray, Moushakhi, 2017. "Export profitability, competition and technology," International Review of Economics & Finance, Elsevier, vol. 47(C), pages 35-45.
    14. Anming Zhang & Yimin Zhang & Joseph A. Clougherty, 2011. "Competition and Regulation in Air Transport," Chapters,in: A Handbook of Transport Economics, chapter 35 Edward Elgar Publishing.
    15. Jenatabadi, Hashem Salarzadeh & Ismail, Noor Azina, 2014. "Application of structural equation modelling for estimating airline performance," Journal of Air Transport Management, Elsevier, vol. 40(C), pages 25-33.
    16. Heshmati, Almas & C. Kumbhakar, Subal & Kim, Jungsuk, 2016. "Persistent and Transient Efficiency of International Airlines," Working Paper Series in Economics and Institutions of Innovation 444, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.

    More about this item

    Keywords

    airlines; exports; national champion; rivalry hypothesis;

    JEL classification:

    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General
    • L52 - Industrial Organization - - Regulation and Industrial Policy - - - Industrial Policy; Sectoral Planning Methods
    • L93 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Air Transportation

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cpr:ceprdp:6871. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.