from Italian Firm-Level Data

A large body of literature in International Economics has analysed the impact of in-creased import competition on domestic \u85rms. The link between \u85rm-level exports and changes in the competitive environment on foreign markets is less well understood, however. This is despite the fact that exports make up a signi\u85cant and growing share of total manu-facturing production in most countries. We derive a theory-based econometric speci\u85cation linking destination-speci\u85c exports to foreign demand and the degree of competitiveness or crowdedness of a foreign market. The latter is a summary measure of the number and productive e ¢ ciency of \u85rms competing in a given market and the barriers impeding their access, such as tari¤s or physical distance. We estimate this speci\u85cation on a large sample of Italian manufacturing \u85rms in 1992-2003 and use the results for a series of counterfactual experiments. Our \u85ndings indicate that increased numbers and e ¢ ciency of foreign \u85rms and improvements in their access to destination markets have reduced Italian exports by around 0.2-0.4 % per year. This is similar to the e¤ects of tari ¤ reductions for Italian \u85rms (+0.3%/year) but smaller than the impact of higher unit labour costs (-1.4%/year) and les