IDEAS home Printed from https://ideas.repec.org/a/bla/worlde/v41y2018i3p801-830.html
   My bibliography  Save this article

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

Author

Listed:
  • John P. Weche

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.

Suggested Citation

  • John P. Weche, 2018. "The heterogeneous competitive effects of trade and foreign direct investment: Firm†level evidence for European countries," The World Economy, Wiley Blackwell, vol. 41(3), pages 801-830, March.
  • Handle: RePEc:bla:worlde:v:41:y:2018:i:3:p:801-830
    DOI: 10.1111/twec.12590
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/twec.12590
    Download Restriction: no

    File URL: https://libkey.io/10.1111/twec.12590?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ioannis Bournakis & Sotiris Papaioannou & Marina Papanastassiou, 2022. "Multinationals and domestic total factor productivity: Competition effects, knowledge spillovers and foreign ownership," The World Economy, Wiley Blackwell, vol. 45(12), pages 3715-3750, December.
    2. Xianhai Huang & Yi Wang & Zhujun Zhu & Xueyin Song, 2022. "Quality of imported intermediates, innovation behaviour and markups: Firm‐level evidence from China," The World Economy, Wiley Blackwell, vol. 45(9), pages 2796-2819, September.
    3. Yang, Chih-Hai, 2023. "Competition in the Chinese market: Foreign firms and markups," Journal of the Japanese and International Economies, Elsevier, vol. 67(C).
    4. Santos, Diogo Oliveira & Britto, Gustavo & Ribeiro, Rafael S.M. & Cardoso, Debora Freire, 2023. "Do wages squeeze markups? Sectoral-level evidence for Brazil, 2000–2013," Structural Change and Economic Dynamics, Elsevier, vol. 66(C), pages 52-66.
    5. José Manuel Mansilla-Fernández & Juliette Milgram-Baleix, 2023. "Working capital management, financial constraints and exports: evidence from European and US manufacturers," Empirical Economics, Springer, vol. 64(4), pages 1769-1810, April.
    6. Yue Li & Kuo,Ryan Chia & Pinzon Latorre,Mauricio Alejandro & Albertson,Mark Peter, 2022. "FDI, Market Power, and Markups : Evidence from Vietnam," Policy Research Working Paper Series 9998, The World Bank.
    7. Dolores Añon Higón & Ionnanis Bournakis, 2024. "Global Value Chains (GVCs) participation and Markups," Working Papers 2403, Department of Applied Economics II, Universidad de Valencia.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:worlde:v:41:y:2018:i:3:p:801-830. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://www.blackwellpublishing.com/journal.asp?ref=0378-5920 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.