Antitrust effects of export promotion

Abstract

This article identifies a potential source of gain from export promotion policies which stems from their effects on domestic competition. For a firm in a small country facing increasing costs of production, the level of exports is essentially a residual following the decision regarding domestic sales. It will tend to be inversely related to industry concentration and, where the latter is endogenous (as with an aggressive entry-preventing incumbent), policies affecting exports may also affect domestic market structure. The argument is made by way of a worked example, and its general applicability is discussed. Show more