The pro‐competitive effects of foreign firm entry: Evidence from the Korean retail sector

Kyung In Hwang

The World Economy, 2022, vol. 45, issue 5, 1587-1613

Abstract: I investigate the effect of foreign entry on host country market competition. Using a firm‐level data set for the Korean retail sector during the process of FDI liberalisation, I find that the increase in the number of foreign stores caused average markups across local firms to fall. I show that the channel through which FDI decreases local firms’ markups increased competition as opposed to productivity spillovers.

Date: 2022
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