Theoretical basis for a method of distribution of market share changes in international trade

Abstract

Chami's method for calculating how much of an exporter's market share change can be attributed to each competitor has regularly been applied in the literature, but it has not been related to any theory yet. Here, an attempt is made to examine the trade models that can provide the theoretical foundations for the method, clarifying the assumptions underlying its results. It is shown that the method is consistent with most of the main trade models found in the literature.

Dynamics of Australia's LNG export performance: A modified constant market shares analysis

“…Therefore, we followed the extension made by Gilbert and Muchová (2018) By doing so, we can quantitatively measure the bilateral competition between Australia and the other LNG major exporters. How much of an exporter market share change can be attributed to each competitor as illustrated in Batista ( 2008) is consistent with most of the main trade models, especially when the traded good is homogeneous or horizontally differentiated (Batista, 2010).…”

“…Due to the development of LNG technologies, LNG trade makes it possible to transport natural gas to places that pipelines do not reach. The International Energy Agency (IEA), in its "World Energy Outlook 2016", interprets the dynamic growth of LNG production and trading as a second gas revolution, after the shale gas revolution in 2010-2012(IEA, 2016. In its November 2018 forecast, it predicted that LNG would account for 60% of the global gas trade in 2040 (IEA, 2018).…”

Export Quality and the Dynamics of North–South Competition

“…Chami Batista () shows that the Chami Batista's () method of distributing exporters' gains and losses among competitors is consistent with the main theoretical models of competition. However, the method requires that product markets are defined in such a way that the varieties exported by each exporting country directly compete with or are substitutes of the varieties of all the other exporting countries in each product market.…”

“…The method of distribution of market share changes due to direct competition in international trade was developed in Chami Batista (), and its theoretical foundations were discussed in Chami Batista (). The method starts with the microshare change of exporting country H in importing country L of commodity i in the period from year 0 to year t .…”

“…For some more recent references of the vast CMS literature, see, for instance, Wilson et al. (), Ahmadi‐Esfahani (), Chami Batista (, ) and Cheptea et al. ().…”