Working Paper Series in Economics and Institutions of Innovation,
Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies

Abstract: The competition for market shares has taken various routes over the years. The first factor that perhaps spring to mind is prices. Studies have also shown that advanced technology and superior quality of products are important in the competition for market shares. The purpose of this study is to explore whether changes in export and production structures in the OECD countries tend to incorporate the income sensitivity of demand for products and if a strategy of this kind is beneficial for the development of market shares. The theoretical framework is provided by Kaldor (1957, 1967 and 1970) and by the concept of non-homothetic preferences, first established by Engel (1857 and 1881). The results show that there has been an increased focus on high-income elastic products among the OECD countries. The strategy of concentrating export and production to the high income elastic products also seems to generate increases in market shares

Keywords: export structure; income elasticity of export demand; competitiveness; market shares; Nicholas Kaldor

JEL-codes: F10; F14

42 pages, August 8, 2007

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