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Profitability, Efficiency, and Market Structure in the Meat and Milk Processing Industry: Evidence from Central Europe

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  • Zdeňka Žáková Kroupová

    (Department of Economics, Faculty of Economics and Management, Czech University of Life Sciences Prague, 165 00 Prague, Czech Republic)

  • Gabriela Trnková

    (Department of Economics, Faculty of Informatics and Management, University of Hradec Králové, 500 02 Hradec Králové, Czech Republic)

Abstract

This study aims to investigate the impact of the market structure and efficiency on firm performance in the meat and milk processing industry in Poland, Czechia, and Slovakia. Using stochastic frontier analysis and a profitability regression model applied to data from 2015 to 2021, the results indicate no evidence of collusive behavior in the examined markets. Instead, profitability is significantly driven by efficiency, supporting the hypothesis of an efficient market structure. Companies with higher market shares do not exploit their market power to set higher prices and increase profitability. The findings highlight efficiency as a critical determinant of performance in unconcentrated markets, offering valuable insights for stakeholders in the food processing industry and policymakers.

Suggested Citation

  • Zdeňka Žáková Kroupová & Gabriela Trnková, 2025. "Profitability, Efficiency, and Market Structure in the Meat and Milk Processing Industry: Evidence from Central Europe," IJFS, MDPI, vol. 13(1), pages 1-30, March.
    • Handle: RePEc:gam:jijfss:v:13:y:2025:i:1:p:45-:d:1608737
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    References listed on IDEAS

    as
    1. Cliff Huang & Tai-Hsin Huang & Nan-Hung Liu, 2014. "A new approach to estimating the metafrontier production function based on a stochastic frontier framework," Journal of Productivity Analysis, Springer, vol. 42(3), pages 241-254, December.
    2. Chad Syverson, 2019. "Macroeconomics and Market Power: Context, Implications, and Open Questions," Journal of Economic Perspectives, American Economic Association, vol. 33(3), pages 23-43, Summer.
    3. George Battese & D. Rao & Christopher O'Donnell, 2004. "A Metafrontier Production Function for Estimation of Technical Efficiencies and Technology Gaps for Firms Operating Under Different Technologies," Journal of Productivity Analysis, Springer, vol. 21(1), pages 91-103, January.
    4. Manuel Arellano & Stephen Bond, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 58(2), pages 277-297.
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