Efficiency and Market Share in Hungarian Corporate Sector
AbstractOne of the major tasks facing a transition economy is to create the competitive environment of a properly functioning market economy. It is widely believed that competition has a positive effect on efficiency, but the theoretical and empirical support is quite scarce. The objective of this paper is to investigate the link between competition and efficiency for the Hungarian corporate sector during various phases of the transition process. We employ frontier production functions for exploring differences among groups of firms, and for identifying the typical adjustment process of each group separately throughout the transition period until 1997. Groups are defined according to industries, size, and ownership. The estimated production functions indicate a gradual improvement in efficiency and a shift from decreasing to increasing returns to scale due to a growing share of small firms entering higher returns regimes. Market share can be explained by the degree of internal and external competition and by the efficiency of the firm. Transitional recession in 1990-1 was followed by a fast consolidation period, with rapidly increasing firm level efficiency and improving returns to scale. This consolidation period ended in 1994-5, after that mean firm level efficiency only changed slowly. Massive investments largely increased the market share of the better performing firms and sectors, resulting in rapid economic growth. However, this economic growth may become vulnerable if productive efficiency fails to improve faster.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by William Davidson Institute at the University of Michigan in its series William Davidson Institute Working Papers Series with number 333.
Date of creation: 01 Jul 2000
Date of revision:
Contact details of provider:
Postal: 724 E. University Ave, Wyly Hall 1st Flr, Ann Arbor MI 48109
Phone: 734 763-5020
Fax: 734 763 5850
Web page: http://www.wdi.umich.edu
More information through EDIRC
firm in transition economy; production functions; efficiency;
Other versions of this item:
- Gabor Korosi & Laszlo Halpern, 2000. "Efficiency and Market Share in Hungarian Corporate Sector," IEHAS Discussion Papers 0009, Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences.
- C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Longitudinal Data; Spatial Time Series
- D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
- D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
This paper has been announced in the following NEP Reports:
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Laszlo Halpern & Gabor Korosi, 1998. "Corporate Structure and Performance in Hungary," William Davidson Institute Working Papers Series 187, William Davidson Institute at the University of Michigan.
- Hay, Donald A & Liu, Guy S, 1997. "The Efficiency of Firms: What Difference Does Competition Make?," Economic Journal, Royal Economic Society, vol. 107(442), pages 597-617, May.
- Nickell, Stephen & Nicolitsas, Daphne & Dryden, Neil, 1997.
"What makes firms perform well?,"
European Economic Review,
Elsevier, vol. 41(3-5), pages 783-796, April.
- S Estrin & P Hare, 1992. "Firms in Transition: Modelling Enterprise Adjustment," CEP Discussion Papers dp0089, Centre for Economic Performance, LSE.
- J. David Brown & John S. Earle, 2000.
"Competition and Firm Performance: Lessons from Russia,"
William Davidson Institute Working Papers Series
296, William Davidson Institute at the University of Michigan.
- Brown, J David & Earle, John S, 2000. "Competition And Firm Performance: Lessons From Russia," CEPR Discussion Papers 2444, C.E.P.R. Discussion Papers.
- Kalirajan, K. P., 1997. "A measure of economic efficiency using returns to scale," Economics Letters, Elsevier, vol. 56(3), pages 253-257, November.
- Harrison, Ann E., 1994. "Productivity, imperfect competition and trade reform : Theory and evidence," Journal of International Economics, Elsevier, vol. 36(1-2), pages 53-73, February.
- Otto, Glenn, 1999. "The Solow Residual for Australia: Technology Shocks or Factor Utilization?," Economic Inquiry, Western Economic Association International, vol. 37(1), pages 136-53, January.
- Konings, Jozef & Repkin, Alexander, 1998. "How Efficient are Firms in Transition Countries? Firm-Level Evidence from Bulgaria and Romania," CEPR Discussion Papers 1839, C.E.P.R. Discussion Papers.
- Aigner, Dennis & Lovell, C. A. Knox & Schmidt, Peter, 1977. "Formulation and estimation of stochastic frontier production function models," Journal of Econometrics, Elsevier, vol. 6(1), pages 21-37, July.
- Aghion, Philippe & Blanchard, Olivier J & Carlin, Wendy, 1994. "The Economics of Enterprise Restructuring in Central and Eastern Europe," CEPR Discussion Papers 1058, C.E.P.R. Discussion Papers.
- Brada, Josef C & King, Arthur E & Ma, Chia Ying, 1997. "Industrial Economics of the Transition: Determinants of Enterprise Efficiency in Czechoslovakia and Hungary," Oxford Economic Papers, Oxford University Press, vol. 49(1), pages 104-27, January.
- Mathilde Maurel, 2001. "Investment, Efficiency, and Credit Rationing: Evidence from Hungarian Panel Data," William Davidson Institute Working Papers Series 403, William Davidson Institute at the University of Michigan.
- Patricia Augier & Olivier Cadot & Marion Dovis, 2013.
"Imports and TFP at the firm level: the role of absorptive capacity,"
Canadian Journal of Economics,
Canadian Economics Association, vol. 46(3), pages 956-981, August.
- Augier, Patricia & Cadot, Olivier & Dovis, Marion, 2009. "Imports and TFP at the Firm Level: The Role of Absorptive Capacity," CEPR Discussion Papers 7218, C.E.P.R. Discussion Papers.
- Augier, Patricia & Cadot, Olivier & Dovis, Marion, 2009. "Imports and TFP at the Firm Level: The Role of Absorptive Capacity," CEPREMAP Working Papers (Docweb) 0903, CEPREMAP.
- Augier, Patricia & Cadot, Olivier & Dovis, Marion, 2010. "Imports and TFP at the Firm Level: The Role of Absorptive Capacity," CEPREMAP Working Papers (Docweb) 1016, CEPREMAP.
- Gabor Korosi, 2002. "Labour Adjustment and Efficiency in Hungary," Budapest Working Papers on the Labour Market 0204, Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences.
- Andrei Medvedev & Alena Zemplinerová, 2005. "Does Competition Improve Performance? Evidence from the Czech Manufacturing Industries," Prague Economic Papers, University of Economics, Prague, vol. 2005(4), pages 317-330.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Laurie Gendron).
If references are entirely missing, you can add them using this form.