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Rule of Law and Large Firms Concentration in Southeast Europe

Author

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  • Aleksandar B. Todorov

    (University of Economics Ð Varna)

Abstract

The purpose of this paper is to provide empirical evidence on regularities concerning the relationship between the rule of law and economic concentration. We use panel data on the largest companies in ten countries in Southeast Europe between 2009 and 2021 to assess the impact of the rule of law on aggregate concentration, that is, the share of the largest companies in total economic activity. Using fixed-effects panel models and an instrumental variables approach, we find that improvements in the rule of law are associated with greater economic concentration. This finding is consistent with previous research on institutional development and firmsÕ performance in Eastern Europe. It suggests that improvements in the rule of law benefit existing export-oriented companies and that policy efforts should be focused on smaller, start-up firms.

Suggested Citation

  • Aleksandar B. Todorov, 2023. "Rule of Law and Large Firms Concentration in Southeast Europe," Bulgarian Economic Papers bep-2023-06, Faculty of Economics and Business Administration, Sofia University St Kliment Ohridski - Bulgaria // Center for Economic Theories and Policies at Sofia University St Kliment Ohridski, revised Oct 2023.
    • Handle: RePEc:sko:wpaper:bep-2023-06
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    Keywords

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    JEL classification:

    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact
    • E02 - Macroeconomics and Monetary Economics - - General - - - Institutions and the Macroeconomy
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
    • P37 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - Legal

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