Reaching Up and Reaching Out: The Impact of Competition on Firms’ Productivity and Export Decisions

Eric Osei Opoku, Isabel K. M. Yan () and Kate Hydes
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Eric Osei Opoku: City University of Hong Kong
Isabel K. M. Yan: City University of Hong Kong
Kate Hydes: UCD School of Economics, Ireland

No GRU_2018_012, GRU Working Paper Series from City University of Hong Kong, Department of Economics and Finance, Global Research Unit

Abstract: This paper investigates the effect of competition in both the domestic and foreign markets on firm productivity and export decisions using firm level data from 139 countries. Using a Sample Selection Endogenous Treatment (SSET) Poisson model that tackles both the issue of endogenous sample selection and endogenous treatment at the same time, we document robust evidence that strong competition in the domestic market propels firms to be more productive, and rising domestic competition increases firms’ propensity to export. However, firms’ export intensity, i.e. how much they export, is not directly influenced by competition in the domestic market. Moreover, lower competition in the foreign market increases the propensity of domestic firms to export, enlarging the set of exporting firms to firms with relatively smaller export amount.

Keywords: Productivity; Export Propensity; Export Intensity; Competition; SSET-Poisson Model (search for similar items in EconPapers)
JEL-codes: F14 O12 (search for similar items in EconPapers)
Pages: 40 pages
Date: 2018-06-21
New Economics Papers: this item is included in nep-int
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Published in Pacific Economic Review, available on 25 November 2018

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Persistent link: https://EconPapers.repec.org/RePEc:cth:wpaper:gru_2018_012

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