Domestic Markets and International Competitiveness

Ashish Arora () and Alfonso Gambardella
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Alfonso Gambardella: University of Urbino

Industrial Organization from EconWPA

Abstract: DOMESTIC MARKETS AND INTERNATIONAL COMPETITIVENESS This paper develops a theoretical and empirical model to analyze the effects of the size and nature of domestic markets on the international competitiveness of national industries. We validate our theory using data on the more than 20,000 plants in the sector producing engineering services for petrochemical plants. Our analysis suggests that the (relative to the US) competitiveness of European or Japanese industries is greater in activities whose underlying competencies can be utilized repeatedly across products instead of being confined to well defined product category. Put differently, the cost penalty due to the fragmented European markets is the least in the case of activities based on generic competencies, and the greatest for activities based on product specific competencies. Keywords: International competition, market size, competencies, engineering industry

Keywords: international competitiveness; market size; product specific assets; engineering services; chemical industry (search for similar items in EconPapers)
JEL-codes: L1 O4 L8 F0 (search for similar items in EconPapers)
Date: 1996-05-27
Note: Type of Document - PS; prepared on IBM PC ; to print on PostScript; pages: 44; figures: included/request from author/draw your own
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Persistent link: http://EconPapers.repec.org/RePEc:wpa:wuwpio:9605001

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