Published in Prague Economic Papers, 2000/4, pp339-353 IMPACT OF FOREIGN TRADE ON MARKET CONCENTRATION: CZECH MANUFACTURING INDUSTRIES IN 1993-1997 *

Paper presents an empirical analysis of the relationship between international trade and market concentration. Market concentration is measured with and without adjustment for foreign trade and results are compared. In most markets adjustment of domestic supply for exports and imports reduces market concentration. Most concentrated industries as a rule further concentrated and the least concentrated industries further de-concentrated during the period 1993-1997. Comparison of market concentration with the EU showed that manufacturing product markets that are in the EU very concentrated and for which economies of scale are typical, are not concentrated in the Czech Republic. This fact can imply a performance that is bellow the optimal scale and low competitiveness in the international markets. On the other hand, the least concentrated markets in EU continue to be relatively more concentrated in the Czech Republic. These are often local markets in which foreign trade cannot create competition and should be therefore closely monitored by anti-monopoly authority