Export Rivalry Research Articles

Organizational form and multiple exportable goods in export rivalry trade

AbstractFocusing on the multiple exportable goods between intrabrand and interbrand competition in the export rivalry market, we analyze foreign firms' endogenous choice of organizational form in the face of tariffs. It is shown that if the degree of intrabrand competition is sufficiently high, firms provide corporate incentives (i.e., U‐form) when goods are substitutes and divisional incentives (i.e., M‐form) when goods are complements, and vice versa. This result relating to the prisoner's dilemma situation depends on which effect between the tariff level and incentive terms dominates. In the case of a low degree of intrabrand competition, choosing the M‐form (U‐form) brings about Pareto efficiency for foreign firms' profits and social welfare in the importing country when goods are substitutes (complements). In contrast to previous studies, when comparing the case of no delegation with the M‐form or U‐form, the Pareto optimum can also be achieved for both foreign firms choosing the M‐form or U‐form endogenously and the importing country, without a prisoner's dilemma involving no delegation.

The scope for strategic asymmetry under international rivalry

In the context of a model of international trade through reciprocal dumping with horizontally differentiated goods, we study the endogenous choice of quantities and prices as strategic variables. We show that while a Cournot outcome prevails under conditions of export rivalry, strategic asymmetry under foreign direct investment rivalry may be observed, especially when it is possible to initially deter FDI by committing to a price contract, and when switching is costly and/or takes time.

Strategic delegation and network externalities under export rivalry market

AbstractIn the presence of network externalities, this study examines the endogenous delegation structure in an export rivalry market with import tariff under Bertrand competition. Contrast to previous works, we show that (i) with strong (weak) network externalities, choosing delegation for exporters is a dominant strategy, which implies the managerial delegation for output expansion (restriction) is socially desirable; (ii) with intermediate network externalities, the exporters choose no delegation in equilibrium; (iii) compared to no delegation, a smaller import tariff further increases both exporters incentives, consumer surplus and social welfare to choose delegation for output expansion unless the strength of network externalities is small; and (iv) hence, two contrasting prisoner’s dilemmas occur in the Bertrand competition when the network effect is medium‐sized.

A Note on Strategic Delegation and Network Externalities Under Export Rivalry Market

In the presence of network externalities, this study examines the endogenous delegation structure in an export rivalry market with import tariff under Bertrand competition. Contrast to previous works, we show that (i) with strong (weak) network externalities, choosing delegation for exporters is a dominant strategy, which implies the managerial delegation for output {\it expansion (restriction)} is socially desirable; (ii) with intermediate network externalities, the exporters choose no delegation in equilibrium; (iii) compared to no delegation, a smaller import tariff further increases both exporters incentives to choose delegation for output expansion unless the strength of network externalities is small.

Export rivalry and exchange rate pass‐through

AbstractIn this paper, we investigate the influence of market rivalry on firm‐level exchange rate pass‐through. Similar to Bloom et al. Econometrica, 80, 1347–1393 (2013), we define market rivalry as product market proximity, and expect the cross market spillovers, that is, through leaked information or reputation, to affect firm‐level export price. Using a comprehensive dataset from Chinese exporters for the 2000–2007 period, we find that in response to a higher degree of market rivalry firms are less responsive to exchange fluctuations. This unresponsiveness suggests a higher degree of exchange rate pass‐through. The influence of market rivalry is stronger among firms that export consumption and heterogeneous products, and to developed countries. Our results are robust to different measures of market rivalry and specifications.

PENGARUH LIBERALISASI TERHADAP PERDAGANGAN BILATERAL JEPANG DENGAN CINA DAN ASEAN-5

This study provides the possible effects of trade liberalization commitments (WTO and APEC) on the bilateral trade between Japan and the ASEAN-5 countries (Indonesia, Thailand, Phillipines, Malaysia and Singapore) and China. The degree of the export rivalry or competition between these countries in the Japanese market is examined in two stages. First, using the GTAP (Global Trade Analysis Project Model) to simulate the liberalization impact on the export of these countries in the Japanese market, as well as the Japanese export to these countries. Second, by using the conventional shift-share methodology in order to sense the degree of competition. Findings from this empirical work show that in general China will benefit more than ASEAN-5 countries from the WTO and APEC trade liberalization, especially in its export of textile and resource based manufactures to the Japanese market. Contrarily, ASEAN-5 countries will somewhat suffer some disadvantage on its export to Japan. However, Indonesia and the Phillipines can still rely on its export of resource based manufactures, while Malaysia would still maintain its advantage on its high technology and capital intensive products, Singapore on its service sector, and Thailand on is agricultural manufactures. Japan would benefit most on its bilateral trade with China. Simulations show that there will be an increase of intra-trading, especially in the textile market with China, and agricultural manufactures market with Thailand.Keywords : Trade liberalization, export competitiveness, GTAP, specialization

Export rivalry, vertically-related markets, and optimal public ownership policy

This paper considers the optimal public ownership policy of an upstream firm which competes with a foreign private rival. Both firms supply a produced input to the domestic and foreign downstream firms that compete in an export market. The paper shows that complete privatization of the domestic upstream firm is never optimal. It will likely be fully nationalized if its market share is high, the domestic downstream firms' market share is low, and the total number of firms in the downstream is large. Simulation results reveal that the public firm's optimal profit margin may be negative and that the government ownership level may exhibit a reswitching phenomenon as the number of domestic downstream firms keeps growing. The paper sheds light on the possibility of using government ownership policy as a pseudo-trade and industrial policy.

Export Rivalry, Vertically-Related Markets, and the Optimal Privatization Policy

This paper considers the optimal public ownership policy of an upstream firm which competes with a foreign private rival. Both firms supply a produced input to the domestic and foreign downstream firms that compete in an export market. The paper shows that complete privatization of the domestic upstream firm is never optimal. It will likely be fully nationalized if its market share is high, the domestic downstream firms' market share is low, and the total number of firms in the downstream is large. Simulation results reveal that the public firm's optimal profit margin may be negative and that the government ownership level may exhibit a reswitching phenomenon as the number of domestic downstream firms keeps growing. The paper sheds light on the possibility of using government ownership policy as a pseudo trade and industrial policy.

Market Share Delegation and Strategic Trade Policy

Strategic delegation analysis has been limited to sales delegation cases, until Jansen et al. (International Journal of Industrial Organization 25:531–539, 2007) presented the case of market share delegation. In international trade theory, export rivalry and import protection have always attracted considerable attention. This paper assesses the influence upon optimal trade policy of introducing market share delegation in a trade duopoly context. It shows that delegation matters, and different forms of delegation coupled with asymmetric costs will imply different degrees of government intervention.

On export rivalry and the greening of agriculture–the role of eco‐labels

AbstractWhy do some countries have eco‐labelling programs and others do not? In this paper, we provide both theoretical arguments and empirical evidence suggesting that the answer to this question can shed new light on three questions that have taken center‐stage in the trade and environment debate: (i) does trade exacerbate the exploitation of the environment; (ii) are countries competing in export markets engaged in a race to the bottom in environmental performance; and (iii) do market‐based environmental instruments benefit the rich and hurt the poor?

On export rivalry and the greening of agriculture—the role of eco-labels

Why do some countries have eco-labelling programs and others do not? In this paper, we provide both theoretical arguments and empirical evidence suggesting that the answer to this question can shed new light on three questions that have taken center-stage in the trade and environment debate: (i) does trade exacerbate the exploitation of the environment; (ii) are countries competing in export markets engaged in a race to the bottom in environmental performance; and (iii) do market-based environmental instruments benefit the rich and hurt the poor?

ASEAN and China: Export Rivals or Partners in Regional Growth?

Rivalry in trade between China and its regional neighbours in ASEAN has become a major preoccupation for many regional policy‐makers. For these reasons, strengthening the basis of empirical evidence on regional trade relations is especially important, and this paper does so in two ways. Using very detailed historical trade data, we combine econometric and trade flow analysis to elucidate patterns of export competition and underlying comparative advantage for ASEAN and China. Our findings indicate that the potential exists for both export rivalry and more extensive trade complementarity, but so do many challenges for policy makers who seek to mitigate adjustment costs and facilitate long term efficiency. Our econometric results indicate that, in the short run at least, ASEAN and China are experiencing intensified export competition in prominent third markets such as Japan and the US. More extensive trade flow analysis reveals, however, that in the long run globalisation can accommodate export growth by all the economies of East Asia, if aggregate growth can be sustained to facilitate the structural adjustments necessary for an optimal regional division of labour.

CHINA-ASEAN EXPORT RIVALRY IN THE US MARKET

In this paper, the degree of export rivalry or competition among China and ASEAN-4 (Malaysia, Singapore, Thailand and Indonesia) is examined using the shift-share methodology. Our results show that overall China was more competitive than ASEAN-4 in its exports to the US. China was more competitive in manufacturing exports whereas ASEAN-4 fared better in agricultural or primary exports. China's advantages in export growth and industry structure vis-à-vis ASEAN-4 were less pronounced before, than after, the onset of the Asian financial crisis, implying that the crisis has indeed affected ASEAN-4 more than China. It has been contended that China's advantage in manufacturing exports could have been accentuated by Hong Kong' production in South China, which has been counted in US trade statistics as China's exports to the US. After disentangling Hong Kong's production in China, the degree of rivalry between China and ASEAN-4 is significantly reduced. Our analysis points to the role of sub-regional production synergy in boosting a country''s export competitiveness.

Export Competitiveness of China and ASEAN in the U.S. Market

This article provides a comparison of the changing patterns of export share, product mix, industry structure and export growth among China and ASEAN-4 (Indonesia, Malaysia, Singapore and Thailand) as exporters of primary commodities, labour-intensive goods as well as capital-intensive manufactures to their common U.S. import market. The degree of export rivalry or competition among China and ASEAN-4 in the US. market is examined by using a conventional shift-share methodology. Changes in ASEAN-China's relative real exchange rate, export composition, as well as changes in their trade patterns, insofar as they might have effects on the export shares of the ASEAN-4 and China to the United States, are considered. The study points unequivocally to some rivalry effects from China on the ASEAN4's exports to the United States. Some of the possible approaches to attaining a propitious outcome of the competition, and ways to ameliorate adverse effects of the rivalry are raised and discussed. Introduction China and ASEAN (Association of Southeast Asian Nations)' have experienced strong economic growth over the last two decades or so. The dynamic growth of these economies are attributed, inter alia, to their successful reforms, industrial restructuring and export-led industrializations. Aside from sharing similar rates of growth, there are some other common features between China and the ASEAN countries. For example, in their initial stages of growth, China and ASEAN were predominantly specializing in the production of primary-based and labour-intensive commodities (for example crude minerals, textiles, and clothing), in contrast to the newly-industrialized economies' (NIEs) and Japan's production of largely capital- and technology-intensive products.2 Another similarity is that both China and the ASEAN countries are heavily dependent on the United States and Japan as important destinations for their exports. By exporting similar products (for example labour-intensive goods) to the same markets, these economies tend to face a high degree of export competition or rivalry among themselves. This article aims to provide a comparison of the changing pattern of export competitiveness among China and the four ASEAN countries comprising Indonesia, Malaysia, Singapore and Thailand (hereafter ASEAN-4) as exporters of primary commodities, labour-intensive goods as well as technology-intensive manufactures in the U.S. market. Competitiveness is defined as country A's ability to gain market share on a common export destination (such as the U.S. import market).3 There are many possible factors contributing to the changing level of competitiveness of a trading country. In this article, we confine our analysis to evaluating how important relative changes in real exchange rate, product composition, industry structure and growth rates are in influencing export competitiveness of China and ASEAN-4 in the U.S. import market. The degree of export rivalry among China and ASEAN-4 is examined by using a shift-share model (see, for example, Herschede 1991). In particular, the model assesses the effects of different industry structures and growth rates on the export performance of China and each of the four ASEAN countries in the U.S. market. This article is organized as follows. In the next section, the changing trends and patterns of China and the ASEAN-4's total (primary and manufactured) exports to their major trading partners, namely the United States and Japan, are examined. We then confine our subsequent analysis to the case of the United States as ASEAN and China's common export destination. Issues of changes in real exchange rate and product composition, insofar as they might have effects on the ASEAN-4 and China's export growth rates and on their market share in the U.S. import market, are considered in the article. The shift-share methodology is presented in the following section for assessing and comparing the differences in competitiveness among China and the ASEAN countries in the U. …

Vertically Related Markets: Export Rivalry Between DC and LDC Firms*

AbstractWe present a model of export rivalry in vertically related markets where a DC firm produces a high‐quality good as well as a key input utilized by an LDC firm to produce a low‐quality export good. the DC firm acts as a Stackelberg leader by setting the price of the input and the quantity of its export good. We show that the DC firm's decision on vertical supply depends on the cost, demand, and quality parameters of both producers, and that the LDC government should tax either its final good exports or its key input imports.