The impact of international intra-firm trade on domestic concentration ratios

This paper examines the impact of intra-firm foreign trade on domestic concentration ratios and the interchangeability of trade-adjusted concentration ratios in structure-performance studies. Due to data limitations, previous efforts to adjust domestic concentration ratios have not incorporated the possibility that the largest domestic producers could also be importing the product into the domestic market. Foreign trade adjustments, both intra-firm trade by the leading firms and foreign trade in general, had a relatively small effect upon concentration in the majority of industries; however, approximately 20 industries were identified where foreign, trade is a potentially important competitive factor. Concerning the interchangeability of the estimated concent cation ratios, the results suggested that the measures were interchangeable in linear models, but were not interchangeable in log-linear models.