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Market Power, Competition and Ownership in Emerging Economies

Author

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  • Jozef Konings
  • Patrick Van Cayseele
  • Frederic Warzynsi

Abstract

In this paper, we analyze the effects of trade, concentration and ownership on the pricing behavior of firms in two transition countries, Bulgaria and Romania. We use an extensive dataset of more than 3000 firms and sector level information to estimate the effects of these three factors on the price cost margin (PCM) for the period 1994-1998. We find: 1) that trade disciplines the industry in concentrated industries; 2) that high concentration is associated with more market power; 3) that private and foreign owned firms heve higher PCMs. This indicates that the pricing strategy of private firms is inherently differentthan the one of State firms, either as the results of different objectives or induced by the abuse of market power.

Suggested Citation

  • Jozef Konings & Patrick Van Cayseele & Frederic Warzynsi, 2001. "Market Power, Competition and Ownership in Emerging Economies," LICOS Discussion Papers 11001, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
  • Handle: RePEc:lic:licosd:11001
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    File URL: http://www.econ.kuleuven.be/licos/publications/dp/dp110.pdf
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    Cited by:

    1. 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.

    More about this item

    Keywords

    market power; price cost margin; trade; competition; ownership; transition;

    JEL classification:

    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out
    • P3 - Economic Systems - - Socialist Institutions and Their Transitions

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