Impact Of Market Structure On Export Trade

There is not too much literature about the relationship between market structure and export trade, the two developed along their own path.lt is the new trade that focused on the influence which market structure acted on expoet trade, the theory explained intra-industry trade with assumption of product differentiation,increasing returns to scale and imperfect competition. But the theory only explained the trade patterns, did not study the mechanism how market structure acted on export trade. This paper tries to analyze the mechanism that market structure acts on export trade, then take China’s auto industry for example to test the theory above, at last,puts some policy recommendations to improve China’s auto industry market structure and to promote export trade.First of all,this paper ananlyzes the situation that domestic oligopolistic firms face two different foreign market structures when exporting. When domestic market is oligopolistic, the demand that every firm faces decreases with the increase of the number of firms, the price of product decreases, if foreign market is perfectly competitive, it is profitable to export for domestic firms,they will decrease domestic sale,increase export trade; if foreign market is monopoly, domestic firms will do exporting game with foreign firms, at last both choose exporting. Thus,whatever situation domestic firms face,the competition among them will lead to more export,that is to say, market concentration is negatively related to export trade. Then this paper analyzes the influence firm size acts on export trade, under certain circumstance, the bigger firm size is, the more export trade is, it can use economies of scale and economies of scope, so the cost is low, international competitiveness is high, export is much. Finally, this paper analyzes the influence product differentiation acts on export trade, if the degree of product differentiation is high, the kind of product is much, this can satisfy the preference of diverse of foreign consumers, so export is much.This paper verifies automotive industry of our country according the analysis above. The result shows the influence of market concentration and firm size act on export trade are different. Firm size can promote export trade,the bigger firm size is,the export trade is; market concentration can inhibit export trade, export trade decreases with the increase of market concerntration, because when market concerntration increases, there will be less competition among firms,they will not innovate to compete in international market.According to the result, in order to promote the export of automotive industry, we must know two points:1.increase the size of auto company;2.maintain the competitive vitality of the auto industry. Thus, the auther suggests that auto industry of our country should construct the oligopolistic market structure, this can take into account the two points above. The auther puts forth policy recommendations as follows:1.carrying out mergers and acquisitions vigorously, to improve the level of the size of the auto industry;2.restructuring assets, improving the competitiveness of firms;3.establishing the propetry rights trading market;4. improving the social security system further;5.establishing related exiting regulations.