Working Paper: CEPR ID: DP6871
Authors: Joseph A. Clougherty; Anming Zhang
Abstract: 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.
Keywords: airlines; exports; national champion; rivalry hypothesis
JEL Codes: L40; L52; L93
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Domestic rivalry (J12) | International market shares of airlines (L93) |
| Increased domestic competition (L49) | Airlines' export performance (L93) |
| Domestic competition (L19) | Enhanced firm performance effect (L25) |
| Domestic rivalry (J12) | Number of competitors in international markets (L19) |
| Domestic rivalry (J12) | Joint economies of production (E23) |
| Domestic rivalry (J12) | Improved international competitiveness (F23) |