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

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The heterogeneous competitive effects of trade and foreign direct investment: Firm-level evidence for European countries. / Weche, John P.
In: World Economy, Vol. 41, No. 3, 03.2018, p. 801-830.

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@article{91ba5e64078d43d38e7746341a5d9bc5,
title = "The heterogeneous competitive effects of trade and foreign direct investment: Firm-level evidence for European countries",
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.",
keywords = "competition, efficiency, foreign direct investment, markups, spillovers, trade, Economics",
author = "Weche, {John P.}",
year = "2018",
month = mar,
doi = "10.1111/twec.12590",
language = "English",
volume = "41",
pages = "801--830",
journal = "World Economy",
issn = "0378-5920",
publisher = "Wiley-Blackwell Publishing Ltd.",
number = "3",

}

RIS

TY - JOUR

T1 - The heterogeneous competitive effects of trade and foreign direct investment

T2 - Firm-level evidence for European countries

AU - Weche, John P.

PY - 2018/3

Y1 - 2018/3

N2 - 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.

AB - 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.

KW - competition

KW - efficiency

KW - foreign direct investment

KW - markups

KW - spillovers

KW - trade

KW - Economics

UR - http://www.scopus.com/inward/record.url?scp=85039171135&partnerID=8YFLogxK

U2 - 10.1111/twec.12590

DO - 10.1111/twec.12590

M3 - Journal articles

AN - SCOPUS:85039171135

VL - 41

SP - 801

EP - 830

JO - World Economy

JF - World Economy

SN - 0378-5920

IS - 3

ER -

DOI