Competing at home to win abroad: Evidence from Japanese industry

The study explores the influence of domestic competition on international t rade performance, using data from a broad sample of Japanese industries. Do mestic rivalry is measured directly using market-share instability rather t han employing structural variables such as seller concentration. We find ro bust evidence that domestic rivalry has a positive and significant relation ship with trade performance measured by world export share, particularly wh en R&D intensity reveals opportunities for dynamic improvement and innovati on. Conversely, trade protection reduces export performance. These findings support the view that local competition-not monopoly, collusion, or a shel tered home market-pressures dynamic improvement that leads to international competitiveness.