Product Market Competition in Transition Economies: Increasing Varieties and Consumer Loyalty
The collapse of communism brought about previously inexistent product market competition in transition economies. This paper analyzes such rivalry with a focus on some specific features of these markets. While inviting foreign multinationals is always beneficial for local consumers, cost reduction at the local producers (i.e., former SOE's) is necessary to realize the full-fledged benefits of such entry. Inefficient production by the former SOE's is particularly detrimental when the cost difference vis-à-vis foreign entrants is above a threshold level, because the more efficient entrants exploit their cost advantages to raise prices instead of pricing aggressively for market share. This in turn reduces the appeal of opening domestic markets to international trade to promote competition.
|Date of creation:||01 Mar 1999|
|Date of revision:|
|Contact details of provider:|| Postal: 724 E. University Ave, Wyly Hall 1st Flr, Ann Arbor MI 48109|
Phone: 734 763-5020
Fax: 734 763-5850
Web page: http://www.wdi.umich.edu
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:wdi:papers:1999-223. 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: (Laurie Gendron)
If references are entirely missing, you can add them using this form.