Does Market Structure Matter? Evidence From The Indian Cement Industry
The main objective of this paper is to answer the question; does the market structure explain the variation in profitability of Indian cement industry? If yes, which measure; if no, why not? To answer this question, we used the empirical technique, the Davidson-MacKinnon’s J test, to test the non-nested hypotheses to choose among the three competing measures of the market structure, CR4, HHI, and CV of market share. We found that none of the measures of market structure are able to explain the variation in profitability of the Indian cement industry. In other words, neither concentration (measured in terms of CR4 and HHI) nor efficiency of the firms (measured in terms of CV of market share) is able to explain the variation in profitability. This result is in line with our expectation since, unlike industry profitability, none of the measures of market structure changed significantly during the sample period. Since Competition Commission of India in June 2012 found 11 cement companies indulging in a price cartel, it is clear from the findings that market structure alone cannot explain the behavior of firms in certain market such as cement industry in India. To detect cartel in such market, more detailed examination is required both at industry as well as firm level.
Volume (Year): 9 (2014)
Issue (Month): 3 (December)
|Contact details of provider:|| Postal: Lucian Blaga University of Sibiu, Faculty of Economic Sciences Dumbravii Avenue, No 17, postal code 550324, Sibiu, Romania|
Phone: 004 0269 210375
Fax: 004 0269 210375
Web page: http://economice.ulbsibiu.ro/
More information through EDIRC
References listed on IDEAS
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.:
- Fred A. Forgey & Walter E. Mullendore & Ronald C. Rutherford, 1997. "Market Structure in the Residential Real Estate Brokerage Market," Journal of Real Estate Research, American Real Estate Society, vol. 14(2), pages 107-116.
- Davidson, Russell & MacKinnon, James G, 1981.
"Several Tests for Model Specification in the Presence of Alternative Hypotheses,"
Econometric Society, vol. 49(3), pages 781-793, May.
- Russell Davidson & James G. MacKinnon, 1980. "Several Tests for Model Specification in the Presence of Alternative Hypotheses," Working Papers 378, Queen's University, Department of Economics.
- Kwoka, John E, Jr, 1981. "Does the Choice of Concentration Measure Really Matter?," Journal of Industrial Economics, Wiley Blackwell, vol. 29(4), pages 445-453, June.
- Peltzman, Sam, 1977. "The Gains and Losses from Industrial Concentration," Journal of Law and Economics, University of Chicago Press, vol. 20(2), pages 229-263, October.
- Sam Peltzman, 1977. "The Gains and Losses From Industrial Concentration," NBER Working Papers 0163, National Bureau of Economic Research, Inc.
- Demsetz, Harold, 1973. "Industry Structure, Market Rivalry, and Public Policy," Journal of Law and Economics, University of Chicago Press, vol. 16(1), pages 1-9, April.
- Jovanovic, Boyan, 1982. "Selection and the Evolution of Industry," Econometrica, Econometric Society, vol. 50(3), pages 649-670, May.
- Ravenscraft, David J, 1983. "Structure-Profit Relationships at the Line of Business and Industry Level," The Review of Economics and Statistics, MIT Press, vol. 65(1), pages 22-31, February. Full references (including those not matched with items on IDEAS)
When requesting a correction, please mention this item's handle: RePEc:blg:journl:v:9:y:2014:i:3:p:107-124. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mihaela Herciu)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.