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Does Market Structure Matter? New Evidence from Russia

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  • Brown, Annette
  • Brown, J David

Abstract

In this paper we re-examine empirically the Structure-Conduct-Performance relationship between concentration and profitability using new data on Russia that allow us to overcome the endogeneity problem of market structure and expand on the traditional analysis in several ways. The analysis yields several important results. We find strong evidence that national concentration does increase profitability, but only in geographically dispersed industries, suggesting that regional markets are an important source of market power for oligopolistic industries. We find preliminary evidence that the effects of market structure are persistent in the long run. And we find for Russia that capital intensity is negatively related to profitability, suggesting that capital-intensive industries face higher adjustment costs and thus are less profitable after recessionary shocks.

Suggested Citation

  • Brown, Annette & Brown, J David, 1998. "Does Market Structure Matter? New Evidence from Russia," CEPR Discussion Papers 1946, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:1946
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    Cited by:

    1. Bessonova, Eugenia, 2010. "Efficiency of Manufacturing in Russia: Effect of Domestic Competition and FDI," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 17(1), pages 106-127.
    2. Maryanchyk Ivan, "undated". "Market Structure and Profitability in a Transition Economy: Ukrainian Case," EERC Working Paper Series 03-06e, EERC Research Network, Russia and CIS.
    3. Broadman, Harry G., 2000. "Reducing structural dominance and entry barriers in Russian industry," Policy Research Working Paper Series 2330, The World Bank.
    4. Susan Linz, 2000. "Restructuring with What Success? A Case Study of Russian Firms," William Davidson Institute Working Papers Series 324, William Davidson Institute at the University of Michigan.
    5. Erik Berglof & Ernst-Ludwig von Thadden, 1999. "The Changing Corporate Governance Paradigm: Implications for Transition and Developing Countries," William Davidson Institute Working Papers Series 263, William Davidson Institute at the University of Michigan.
    6. Poltavets Ivan, 2005. "Productivity Differential and Competition: Can an Old Dog be Taught New Tricks?," EERC Working Paper Series 05-09e, EERC Research Network, Russia and CIS.
    7. Harry Broadman, 2000. "Reducing Structural Dominance and Entry Barriers in Russian Industry," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 17(2), pages 155-175, September.

    More about this item

    Keywords

    Competition; Concentration; Market Structure; structure conduct performance; Transition;

    JEL classification:

    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • P2 - Economic Systems - - Socialist Systems and Transition Economies

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