How Intense is Competition in International Markets of Traditional Goods? The Case of Italian Exporters

37 Pages Posted: 14 May 2004

See all articles by Sergio de Nardis

Sergio de Nardis

Istituto di Studi e Analisi Economica (ISAE)

Cristina Pensa

Centro Studi Confindustria - Research Staff of Confindustria

Date Written: May 2004

Abstract

Italian industry continues to specialise in traditional industries. This is a source of concern for some observers who argue that this kind of specialisation overexpose Italian manufacturing to the competition of low cost producers, especially those located in emerging economies. We verify how intense is the competitive pressure on Italian exporters of traditional goods through a synthetic measure of their market power. We make use of the coincidence of the concept of relative mark up (or Lerner index), as an indicator of market power, with that of elasticity of the residual demand curve. Our findings indicate that assertions as to the excessive exposure of the Italian specialised sectors (textile, apparel, footwear, leather, ceramics, wooden furniture) to the pricing policies of competitors are questionable. Over the period considered (the 80s' and the 90s') Italian exporters were able to practice mark ups over marginal cost in most of the products/markets we analysed. Only in a minority of cases Italian exporters showed no market power.

Keywords: Market power, specialisation, international competition, export markets

JEL Classification: F14, L13, L60

Suggested Citation

de Nardis, Sergio and Pensa, Cristina, How Intense is Competition in International Markets of Traditional Goods? The Case of Italian Exporters (May 2004). Available at SSRN: https://ssrn.com/abstract=545565 or http://dx.doi.org/10.2139/ssrn.545565

Sergio De Nardis (Contact Author)

Istituto di Studi e Analisi Economica (ISAE) ( email )

Piazza dell' Indipendenza 4
I-00185
Italy

Cristina Pensa

Centro Studi Confindustria - Research Staff of Confindustria ( email )

viale dell'Astronomia, 30
00144, Rome
Italy

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