International trade and domestic competition: evidence from Belgium

In this paper we investigate the eect of domestic market competition on rm-level export intensity. We apply fractional logit estimation techniques to a comprehensive dataset of Belgian rms observed during the 2003-2008 period. We nd that a positive linkage exists between domestic market competition and export intensity for most rms except the largest rms where a negative relationship exists. This is because a low market concentration in highly saturated markets spurs small rms to innovate and ultimately increase their exports. However, a highly concentrated market favors large rms, because it enables them to exploit economies of scope through exports.