Testing The Core-Competency Model Of Multi-Product Exporters

J. Peter Neary, Beata Javorcik, Carsten Eckel and Leonardo Iacovone

No 11049, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We review the implications of the "core competence" model of multi-product firms, including the "market-size paradox": for most countries, the world market is much larger than the home market, while the costs of accessing foreign markets are relatively low; hence the model predicts that most domestic firms should export more of their core products than they sell domestically; yet, in practice, we do not observe this. Extending the model to allow for investment in export market penetration resolves the puzzle, and Mexican data confirm its predictions: in particular, only the largest firms exhibit the dominance of exports over home sales.

Keywords: Core competence model; Export market penetration costs; Flexible manufacturing; Multi-product firms (search for similar items in EconPapers)
JEL-codes: F12 (search for similar items in EconPapers)
Date: 2016-01
New Economics Papers: this item is included in nep-int
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Citations: View citations in EconPapers (14)

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Related works:
Journal Article: Testing the Core-competency Model of Multi-product Exporters (2016)
Working Paper: Testing The Core-competency Model of Multi-Product Exporters (2015)
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