Resisting Foreign Competition - A Case Study of France and Germany

Abstract

This article incorporates both the new trade and the endogenous growth theories to study the determinants of import volumes of France and Germany so as to explain their individual industrial competitiveness strategies -price or quality competition. This article is different because it studies competitiveness of a country's products by considering its resistance to foreign competition rather than considering exports of these countries. Using disaggregated bilateral To eliminate the price endogeneity problem, we implement a Two Stage Least Squares (2SLS) estimation technique using the cost of production (which