کشش عرضه صادرات حیاتی و فرضیه 'واردات به عنوان نظم بازار "

This paper formally examines the factors underlying how responsive imports must be to domestic prices (the ‘import supply elasticity’) in order to thwart an anticompetitive domestic price increase stemming from a merger – an issue that frequently arises in many antitrust reviews. Domestic firms face a fringe comprised of foreign firms who import their products into the domestic market. In the eyes of domestic consumers, these imports are viewed as imperfect substitutes in demand to the output produced by the domestic firms. The model is solved in terms of the ‘critical’ import supply elasticity that can then be used evaluate the ability of imports to constrain an anticompetitive price increase post-merger. Numerical simulations are conducted to consider the magnitude of perturbations in the model's exogenous parameters. Potential empirical extensions of the model are also considered.

The influence that foreign imports may have on constraining the exercise of market power held by domestic firms – referred to as the ‘imports-as-market-discipline’ hypothesis – has interested industrial economists for some time.2 In recent years, the high industrial growth rates of several countries in Eastern Europe and the Far East have markedly increased the number of firms exporting into numerous domestic US markets, thereby potentially increasing the competitive pressure exerted by foreign suppliers even further. Accordingly, the presence and potential entry (or expansion) of foreign competitors in the domestic market may play an important role in the investigation by the antitrust authorities of proposed mergers between competing domestic firms.

Foreign imports may be an important competitive check on the exercise of market power by domestic firms. Whether this is the case depends on how willing domestic consumers are to substitute foreign products for domestic ones, which in turn endogenously determines the extent to which foreign firms will export products in response to a domestic price increase. In this paper we analytically derive an expression for this ‘critical import supply elasticity,’ which can be used to analyze the ability of foreign firms to constrain domestic price increases