Competing at Home to Win Abroad: Evidence from Japanese Industry

• Published in: The review of economics and statistics Vol. 83; no. 2; pp. 310 - 322
• Main Authors: Sakakibara, Mariko, Porter, Michael E.
• Format: Journal Article
• Language: English
• Published: 238 Main St., Suite 500, Cambridge, MA 02142-1046, USA MIT Press 01-05-2001; MIT Press Journals; MIT Press Journals, The
• Subjects: Cartels; Competition; Competition (Economics); Competitiveness; Domestic markets; Economic competition; Economic conditions; Economic research; Economics; Imports; Industrial concentration; Industrial market; International trade; Market competition; Market share; Rivalry; Studies; Japan
• ISSN: 0034-6535; 1530-9142
• DOI: 10.1162/00346530151143842

The study explores the influence of domestic competition on international trade performance, using data from a broad sample of Japanese industries. Domestic rivalry is measured directly using market-share instability rather than employing structural variables such as seller concentration. We find robust evidence that domestic rivalry has a positive and significant relationship with trade performance measured by world export share, particularly when R&D intensity reveals opportunities for dynamic improvement and innovation. Conversely, trade protection reduces export performance. These findings support the view that local competition-not monopoly, collusion, or a sheltered home market-pressures dynamic improvement that leads to international competitiveness.