Export profitability, competition and technology

- The outcomes of competition and technology on export incentive of a firm are examined.
- Oligopoly prevails in the domestic economy but perfect competition globally.
- Greater competition enhances export profitability when there is advanced technology.
- Greater competition may not ensure higher export profitability for backward technology.
- A threshold technology exists beyond which export is profitable at higher competition.

The present paper seeks to examine the interplay between competition and technology in the export decision-making of homogeneous firms in an oligopolistic framework. The firms' behaviour is studied here in two alternative scenarios: (i) a protected domestic market, and (ii) a non discriminated domestic market (i.e. absence of trading cost etc across the border). In the first scenario, we argue that a higher degree of competition in the domestic market encourages exports when advanced technology prevails and vice versa. Similar effects are noticed in the second scenario. These propositions are analysed both theoretically and empirically.