IDEAS home Printed from https://ideas.repec.org/a/plo/pone00/0308877.html

The relationship between business competition and welfare in Indonesia

Author

Listed:
  • Maman Setiawan
  • Rina Indiastuti
  • Nury Effendi

Abstract

This research freshly investigates the effect of business competition on national welfare in Indonesia. This research uses business competition index data obtained from the Indonesia Competition Commission (KPPU) and welfare indicators data collected from the Indonesian Bureau of Central Statistics (BPS) at the economic sectoral and provincial levels for the period 2018–2020. The relationship between business competition and welfare is estimated using pooled regression model combining year, economic sector, and province. This research also uses business competition index applying both same weights for all dimensions of competition and the weights derived from principal component analysis. This research finds that business competition has a positive effect on welfare as represented by gross regional domestic product, regional productivity, productivity growth, wages, and human development index. Furthermore, the regions with high scores on the competition index mostly come from Java Island. Therefore, Indonesian government must encourage the mainstreaming of business competition in all provinces in Indonesia.

Suggested Citation

  • Maman Setiawan & Rina Indiastuti & Nury Effendi, 2025. "The relationship between business competition and welfare in Indonesia," PLOS ONE, Public Library of Science, vol. 20(1), pages 1-18, January.
    • Handle: RePEc:plo:pone00:0308877
    DOI: 10.1371/journal.pone.0308877
    as

    Download full text from publisher

    File URL: https://journals.plos.org/plosone/article?id=10.1371/journal.pone.0308877
    Download Restriction: no
    File URL: https://journals.plos.org/plosone/article/file?id=10.1371/journal.pone.0308877&type=printable
    Download Restriction: no
    File URL: https://libkey.io/10.1371/journal.pone.0308877?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Alberto Bucci & Fabio Fiorillo & Stefano Staffolani, 2003. "Can Market Power Influence Employment, Wage Inequality and Growth?," Metroeconomica, Wiley Blackwell, vol. 54(2‐3), pages 129-160, May.
    2. Aparicio-Fenoll, Ainhoa, 2015. "The effect of product market competition on job security," Labour Economics, Elsevier, vol. 35(C), pages 145-159.
    3. Makoto Funakoshi & Kazuyuki Motohashi, 2009. "A Quantitative Analysis of Market Competition and Productivity," The Japanese Political Economy, Taylor & Francis Journals, vol. 36(1), pages 27-47.
    4. Giuseppe Nicoletti & Andrea Bassanini & Ekkehard Ernst & Sébastien Jean & Paulo Santiago & Paul Swaim, 2001. "Product and Labour Markets Interactions in OECD Countries," OECD Economics Department Working Papers 312, OECD Publishing.
    5. Crafts, Nicholas, 2012. "British relative economic decline revisited: The role of competition," Explorations in Economic History, Elsevier, vol. 49(1), pages 17-29.
    6. Thomas J. Holmes & James A. Schmitz, 2010. "Competition and Productivity: A Review of Evidence," Annual Review of Economics, Annual Reviews, vol. 2(1), pages 619-642, September.
    7. Maman Setiawan & Grigorios Emvalomatis & Alfons Oude Lansink, 2013. "Structure, conduct, and performance: evidence from the Indonesian food and beverages industry," Empirical Economics, Springer, vol. 45(3), pages 1149-1165, December.
    8. Mariusz Próchniak, 2018. "The impact of product market competition on GDP per capita growth in the EU countries: does the model of capitalism matter?," Post-Communist Economies, Taylor & Francis Journals, vol. 30(2), pages 131-155, March.
    9. Pan, Jay & Qin, Xuezheng & Li, Qian & Messina, Joseph P. & Delamater, Paul L., 2015. "Does hospital competition improve health care delivery in China?," China Economic Review, Elsevier, vol. 33(C), pages 179-199.
    10. Maman Setiawan, 2023. "Measuring the Competition Index in the Indonesian Manufacturing Industry: The Structure–Conduct–Performance Paradigm," Sustainability, MDPI, vol. 15(15), pages 1-13, July.
    11. Aghion, Philippe & Harris, Christopher & Vickers, John, 1997. "Competition and growth with step-by-step innovation: An example," European Economic Review, Elsevier, vol. 41(3-5), pages 771-782, April.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Giuseppe Nicoletti & Stefano Scarpetta, 2003. "Regulation, productivity and growth: OECD evidence [‘A model of growth through creative destruction’]," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 18(36), pages 9-72.
    2. Melitz, Marc J & Redding, Stephen, 2021. "Trade and Innovation," CEPR Discussion Papers 16264, Centre for Economic Policy Research.
    3. Fabio Schiantarelli, 2005. "Product Market Regulation and Macroeconomic Performance: A Review of Cross Country Evidence," Boston College Working Papers in Economics 623, Boston College Department of Economics, revised 04 Aug 2008.
    4. Christian Reiner & Maximilian Benner, 2022. "Cooperation bias in regional policy: Is competition neglected?," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 69(1), pages 187-221, August.
    5. Liliana Varela, 2018. "Reallocation, Competition, and Productivity: Evidence from a Financial Liberalization Episode," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 85(2), pages 1279-1313.
    6. Michael Böheim & Klaus Friesenbichler & Susanne Bärenthaler-Sieber, 2006. "Teilstudie 19: Wettbewerb und Regulierung," WIFO Studies, WIFO, number 27458.
    7. Bassanini, Andrea & Brunello, Giorgio, 2011. "Barriers to entry, deregulation and workplace training: A theoretical model with evidence from Europe," European Economic Review, Elsevier, vol. 55(8), pages 1152-1176.
    8. Kumar, Sanjesh & Singh, Baljeet, 2019. "Barriers to the international diffusion of technological innovations," Economic Modelling, Elsevier, vol. 82(C), pages 74-86.
    9. Ufuk Akcigit & Sina T. Ates, 2023. "What Happened to US Business Dynamism?," Journal of Political Economy, University of Chicago Press, vol. 131(8), pages 2059-2124.
    10. Andersen, Torben M., 2005. "Product market integration, wage dispersion and unemployment," Labour Economics, Elsevier, vol. 12(3), pages 379-406, June.
    11. Daniel Ferreira & Thomas Kittsteiner, 2016. "When Does Competition Foster Commitment?," Management Science, INFORMS, vol. 62(11), pages 3199-3212, November.
    12. Daniel A. Dias & Carlos Robalo Marques & Christine Richmond, 2020. "A Tale of Two Sectors: Why is Misallocation Higher in Services than in Manufacturing?," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 66(2), pages 361-393, June.
    13. Pal, Rupayan, 2010. "Technology adoption in a differentiated duopoly: Cournot versus Bertrand," Research in Economics, Elsevier, vol. 64(2), pages 128-136, June.
    14. S. Luckraz, 2008. "Process Spillovers and Growth," Journal of Optimization Theory and Applications, Springer, vol. 139(2), pages 315-335, November.
    15. Cincera, Michele & Ince, Ela & Santos, Anabela, 2024. "Revisiting the innovation-competition nexus: Evidence from worldwide manufacturing and service industries," Structural Change and Economic Dynamics, Elsevier, vol. 69(C), pages 586-603.
    16. Peter Howitt, 2007. "Innovation, Competition and Growth: A Schumpeterian Perspective on Canada’s Economy," C.D. Howe Institute Commentary, C.D. Howe Institute, issue 246, February.
    17. Joao Paulo Pessoa & John Van Reenen, 2013. "The UK Productivity and Jobs Puzzle: Does the Answer Lie in Labour Market Flexibility?," CEP Reports 31, Centre for Economic Performance, LSE.
    18. Ohki, Kazuyoshi, 2023. "Disruptive innovation by heterogeneous incumbents and economic growth: When do incumbents switch to new technology?," Journal of Mathematical Economics, Elsevier, vol. 107(C).
    19. Adriana D. Kugler & Giovanni Pica, 2006. "The Effects of Employment Protection and Product Market Regulations on the Italian Labour Market," Chapters, in: Julián Messina & Claudio Michelacci & Jarkko Turunen & Gylfi Zoega (ed.), Labour Market Adjustments in Europe, chapter 4, Edward Elgar Publishing.
    20. Bessonova, Evguenia & Gonchar, Ksenia, 2019. "How the innovation-competition link is shaped by technology distance in a high-barrier catch-up economy," Technovation, Elsevier, vol. 86, pages 15-32.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:plo:pone00:0308877. See general information about how to correct material in RePEc.

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: plosone (email available below). General contact details of provider: https://journals.plos.org/plosone/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.