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Market Structure and Profitability in a Transition Economy: Ukrainian Case

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  • Maryanchyk Ivan

Abstract

How does market power influence profitability? Prior research gives no exact answer. However, theory indicates that the relationship is positive. The aim of this paper is to identify whether and how competition influences profitability in the Ukrainian transition economy. Current study employs linear specifications relating profitability to variables that embody competition factors and industries' specificities. Econometric tests provide evidence that concentration indices have no significant effect on profitability at the nationwide level. Nevertheless, competition possibly matters at the level of regional markets. International trade as a source of competition can be a good disciplinary tool for local producers. The vague nature of the relationship between profitability and concentration may signify that competition is flawed in Ukraine.

Suggested Citation

  • 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.
    • Handle: RePEc:eer:wpalle:03-06e
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    References listed on IDEAS

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    JEL classification:

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

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