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How intense is Competition in International Markets of Traditional goods?

Listed author(s):
  • Sergio de Nardis


    (ISAE - Institute for Studies and Economic Analyses)

  • Cristina Pensa

    (CSC- Centro Studi Confindustria)

Italian industry continues to specialise in traditional industries. This is a source of concern for some observers who argue that this kind of specialisation overexpose Italian manufacturing to the competition of low cost producers, especially those located in emerging economies. We verify how intense is the competitive pressure 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 of the products/markets we analysed. Only in a minority of cases Italian exporters showed no market power.

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Paper provided by ISTAT - Italian National Institute of Statistics - (Rome, ITALY) in its series ISAE Working Papers with number 45.

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Length: 36 pages
Date of creation: May 2004
Handle: RePEc:isa:wpaper:45
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  1. Goldberg, Pinelopi Koujianou & Knetter, Michael M., 1999. "Measuring the intensity of competition in export markets," Journal of International Economics, Elsevier, vol. 47(1), pages 27-60, February.
  2. Bresnahan, Timothy F., 1989. "Empirical studies of industries with market power," Handbook of Industrial Organization,in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 2, chapter 17, pages 1011-1057 Elsevier.
  3. Baker, Jonathan B. & Bresnahan, Timothy F., 1988. "Estimating the residual demand curve facing a single firm," International Journal of Industrial Organization, Elsevier, vol. 6(3), pages 283-300.
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