“
BEHIND
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THE
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BORDER
” CONSTRAINTS ON AFRICAN
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ASIAN
TRADE AND INVESTMENT FLOWS199
Vertical Dimensions of CompetitionBuyer-supplier relations can have prominent effects on domestic competition. There are several dimensions in which competition can be affected.
The survey data suggest an association between the degree of competition on the sales side and on the purchase side (figure 4.10). Firms that face more diversified suppliers of material inputs appear to have less concentration of business customers to whom they sell their products.
Similarly,
firms that are more sensitive to price differences among those suppliers (in other words, firms that buy from more competitive input markets) appear to face customers demand that is more sensitive to price changes (that is,
they are selling to more competitive output markets).
A closer look at value chains reveals a deeper dimension of competition in the relationships between buyers and suppliers. Table 4.3
shows that, among the firms surveyed, firms sales are more price sensitive when firms sell unfinished products for further
processing by their buyers, such as raw materials or partially assembled products,
than when they sell completely finished products.
17
This
is suggests that,
by adding value, products become more differentiated and less homoge-
FIGURE 4.10
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