Procompetitive Effects of Foreign Competition on Domestic Markups
Review of International Economics, MS#7312, January 31, 1998
Posted: 30 Apr 1998
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: Suggested Citation