Abstract
We review the implications of the core-competence model of multi-product firms, including the market-size puzzle: for most countries, the world market is much larger than the home market, while the costs of accessing foreign markets are relatively low;hence the model predicts that most domestic firms should export more of their core products than they sell domestically;yet, in practice, we do not observe this. Extending the model to allow for investment in export market penetration resolves the puzzle and Mexican data confirm its predictions: in particular, only the largest firms exhibit the dominance of exports over home sales.
Item Type: | Journal article |
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Faculties: | Economics > Chairs > Seminar for International Trade Theory and Trade Policy |
Subjects: | 300 Social sciences > 330 Economics |
ISSN: | 1467-9396; 0965-7576 |
Language: | English |
Item ID: | 43496 |
Date Deposited: | 27. Apr 2018, 08:04 |
Last Modified: | 04. Nov 2020, 13:18 |