DP6871 Domestic Rivalry and Export Performance: Theory and Evidence from International Airline Markets

Author(s): Joseph A. Clougherty, Anming Zhang
Publication Date: June 2008
Keyword(s): airlines, exports, national champion, rivalry hypothesis
JEL(s): L40, L52, L93
Programme Areas: Industrial Organization, International Trade and Regional Economics
Link to this Page: www.cepr.org/active/publications/discussion_papers/dp.php?dpno=6871

The much-studied relationship between domestic rivalry and export performance consists of those supporting a national-champion rationale, and those supporting a rivalry rationale. While the empirical literature generally supports the positive effects of domestic rivalry, the national-champion rationale actually rests on firmer theoretical ground. We address this inconsistency by providing a theoretical framework that illustrates three paths via which domestic rivalry translates into enhanced international exports. Furthermore, empirical tests on the world airline industry elicit the existence of one particular path – an enhanced firm performance effect – that connects domestic rivalry with improved international exports.