Aggressive fringe competition and international trade

The global integration of product markets is altering the structure of many industries. Firms have become more specialised in their production and national industries have become more concentrated. Although the effects of economic integration are well known, how changing market structures are impacting upon the competitive behaviour and strategic decision-making of firms is less well known. The objective of this paper is to investigate the characteristics of three different market entry strategies used by aggressive foreign competitors upon entering a concentrated domestic market. The paper also considers how domestic firms might respond to the import competition under different conditions. An empirical model investigating the three import strategies is presented that seeks to identify distinguishing characteristics of the aggressive market entry strategies. The identification of key characteristics provides useful insight into how the domestic firm may best respond to either defend market share or maintain profitability.