Procompetitive Effects of Foreign Competition on Domestic Markups

Review of International Economics, MS#7312, January 31, 1998

Posted: 30 Apr 1998

See all articles by Elena Ianchovichina

Elena Ianchovichina

World Bank

James K. Binkley

Purdue University - Department of Agricultural Economics

Thomas W. Hertel

Purdue University - Center for Global Trade Analysis; Center for Robust Decisionmaking on Climate & Energy Policy (RDCEP)

Abstract

A short--run model for estimating the procompetitive effects of foreign competition on markups in an oligopolistic, domestic industry is developed and estimated using data on the Australian automobile industry. Estimates reveal that these effects are rather large and cannot be ignored when predicting the effects of a shock affecting foreign costs. These estimates can also facilitate inferences about the nature of inter--firm rivalry.

JEL Classification: F12, F13, F14

Suggested Citation

Ianchovichina, Elena and Binkley, James K. and Hertel, Thomas W., Procompetitive Effects of Foreign Competition on Domestic Markups. Review of International Economics, MS#7312, January 31, 1998. Available at SSRN: https://ssrn.com/abstract=76748

Elena Ianchovichina (Contact Author)

World Bank ( email )

1818 H. Street, N.W.
MSN3-311
Washington, DC 20433
United States
202-458-8910 (Phone)
202-522-1159 (Fax)

James K. Binkley

Purdue University - Department of Agricultural Economics ( email )

West Lafayette, IN 47907-1145
United States
765-494 42613 (Phone)

Thomas W. Hertel

Purdue University - Center for Global Trade Analysis ( email )

Department of Agricultural Economics
1145 Krannert Building
West Lafayette, IN 47907-1145
United States
765-494-4199 (Phone)
765-494-9176 (Fax)

Center for Robust Decisionmaking on Climate & Energy Policy (RDCEP) ( email )

5735 S. Ellis Street
Chicago, IL 60637
United States

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