How Much Does Trade Contribute to Market Structure?

In general, firm-level data are not available among foreign sellers to enable researchers to compute market concentration in open markets, and especially trade's contribution to this concentration. We implement a theory-based procedure from a generalized Brander-Krugman framework that can be used to estimate foreign contribution to market concentration, using industrial trade and activity data only and without any need for firm-level data. The results suggest a foreign contribution to concentration of around 30%-50% for small European economies and 20%-30% for larger European countries. Market structure is less affected by openness in the USA and Japan. Copyright (c) The London School of Economics and Political Science 2006.