Original scientific paper
https://doi.org/10.18045/zbefri.2019.1.213
Market concentration and profitability: the empirical evidence from Serbian manufacturing industry
Radovan Kastratović
orcid.org/0000-0002-6138-906X
; Analyst, Institute for Business Research – MBA, Dubrovačka 24, 11000 Belgrade, Serbia
Dragan Lončar
; Full professor, Faculty of Economics, University of Belgrade, Kamenicka 6, 11000 Belgrade, Serbia
Siniša Milošević
; Chief economist, Commission for Protection of Competition of the Republic of Serbia, Savska 25, 11000 Belgrade, Serbia
Abstract
The impact of market concentration on profitability is a controversial question in industrial organization without a clear answer. The aim of the research is to investigate this prospective impact in the context of Serbian manufacturing industry. The main hypothesis of the research is that the increase in market concentration increases the profitability in the markets, due to the collusion of the dominant companies. We test this hypothesis by defining, estimating and testing the model describing the impact of structural and other control variables on
market profitability by using secondary panel data for 122 markets, observed in 2015 and 2017. We obtained the data from 30 037 financial reports of the manufacturing industry companies. The model was estimated by using an error component two stage least squares estimator (EC2SLS). The results indicate a statistically significant positive impact of market concentration on profitability, empirically supporting the traditional market power hypothesis.
Keywords
market concentration; profitability; competition; collusion; manufacturing
Hrčak ID:
221680
URI
Publication date:
28.6.2019.
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