The heterogeneous competitive effects of trade and foreign direct investment: Firm†level evidence for European countries

John P. Weche

The World Economy, 2018, vol. 41, issue 3, 801-830

Abstract: This study evaluates the pro†competitive effect of foreign market penetration with a broad firm†level database that covers manufacturing industries in six European countries. The main contribution is the demonstration of the heterogeneous effects on host country competition of the two main channels of foreign market penetration that have been assigned fundamental differences by economic theory: imports and foreign direct investment. The results of dynamic estimates of firm†level markups reveal a pro†competitive effect of imports, while foreign direct investment shows no clear overall impact, suggesting a cancelling out of competitive pressure and spillovers. These findings matter for both future empirical research and policy considerations that must weigh the positive and negative effects of foreign market integration on the competitive environment and consumer welfare.

Date: 2018
References: Add references at CitEc
Citations: View citations in EconPapers (8)

Downloads: (external link)
https://doi.org/10.1111/twec.12590

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:worlde:v:41:y:2018:i:3:p:801-830

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=0378-5920

Access Statistics for this article

The World Economy is currently edited by David Greenaway

More articles in The World Economy from Wiley Blackwell
Bibliographic data for series maintained by Wiley Content Delivery ().