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Testing The Core-competency Model of Multi-Product Exporters

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Listed:
  • Beata Javorcik
  • Peter Neary
  • Carsten Eckel
  • Leonardo Iacovone

Abstract

We review the implications of the "core competence" model of multi-product firms, including the “market-size paradox”: for most countries, the world market is much larger than the home market, while the costs of accessing foreign markets are relatively low; hence the model predicts that most domestic firms should export more of their core products than they sell domestically; yet, in practice, we do not observe this. Extending the model to allow for investment in export market penetration resolves the puzzle, and Mexican data confirm its predictions: in particular,only the largest firms exhibit the dominance of exports over home sales.

Suggested Citation

  • Beata Javorcik & Peter Neary & Carsten Eckel & Leonardo Iacovone, 2015. "Testing The Core-competency Model of Multi-Product Exporters," Economics Series Working Papers 768, University of Oxford, Department of Economics.
    • Handle: RePEc:oxf:wpaper:768
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    References listed on IDEAS

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    Cited by:

    1. Anne‐Célia Disdier & Carl Gaigné & Cristina Herghelegiu, 2023. "Do standards improve the quality of traded products?," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 56(4), pages 1238-1290, November.
    2. Albornoz, Facundo & Calvo Pardo, Héctor F. & Corcos, Gregory & Ornelas, Emanuel, 2023. "Sequentially exporting products across countries," Journal of International Economics, Elsevier, vol. 142(C).
    3. Ngo Van Long & Zhuang Miao, 2019. "Vertically Differentiated Cournot Oligopoly: Effects of Market Expansion and Trade Liberalization on Relative Markup and Product Quality," CIRANO Working Papers 2019s-28, CIRANO.
    4. Facundo Albornoz & Héctor F. Calvo Pardo & Gregory Corcos & Emanuel Ornelas, 2021. "Sequential Exporting across Countries and Products," CESifo Working Paper Series 9119, CESifo.
    5. Urška Čede & Bogdan Chiriacescu & Péter Harasztosi & Tibor Lalinsky & Jaanika Meriküll, 2018. "Export characteristics and output volatility: comparative firm-level evidence for CEE countries," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 154(2), pages 347-376, May.
    6. Ngo Van Long & Zhuang Miao, 2020. "Multiple‐quality Cournot oligopoly and the role of market size," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 29(4), pages 932-952, October.
    7. Ingo Geishecker & Philipp J. H. Schröder & Allan Sørensen, 2017. "Explaining the size differences of exporter premia: theory and evidence," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 153(2), pages 327-351, May.
    8. Hea-Jung Hyun & Jung Hur, 2021. "Global Financial Crisis, Export Credit Insurance, and Scope Adjustment of Multiproduct Exporting Firms," Working Papers 2106, Nam Duck-Woo Economic Research Institute, Sogang University (Former Research Institute for Market Economy).
    9. Aya Elewa, 2018. "Mixed Market Structure, Competition and Market Size: How Does Product Mix Respond?," Working Papers 1245, Economic Research Forum, revised 28 Oct 2018.

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    More about this item

    Keywords

    Core competence model; Export market penetration costs; Flexible manufacturing; Multi-product firms.;
    All these keywords.

    JEL classification:

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

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