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The relationship between technical efficiency and industrial concentration: Evidence from the Indonesian food and beverages industry

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  • Setiawan, Maman
  • Emvalomatis, Grigorios
  • Oude Lansink, Alfons

Abstract

This paper investigates the relationship between technical efficiency and industrial concentration in the Indonesian food and beverages sector. Firm-level data obtained from the Indonesian Bureau of Central Statistics (BPS) are used to estimate technical efficiency scores and calculate measures of industrial concentration. The results show that the food and beverages industry is characterized by high industrial concentration and firms in the industry are inefficient. The Granger-causality test suggests a one-way direction of causality, with industrial concentration having a negative impact on technical efficiency, at the sector level. This suggests that the quiet-life hypothesis, rather than the efficient-structure hypothesis, applies to the Indonesian food and beverages industry.

Suggested Citation

  • Setiawan, Maman & Emvalomatis, Grigorios & Oude Lansink, Alfons, 2012. "The relationship between technical efficiency and industrial concentration: Evidence from the Indonesian food and beverages industry," Journal of Asian Economics, Elsevier, vol. 23(4), pages 466-475.
    • Handle: RePEc:eee:asieco:v:23:y:2012:i:4:p:466-475
    DOI: 10.1016/j.asieco.2012.01.002
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    Cited by:

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    2. Briones, Roehlano M., 2013. "The Structure of Agricultural Trade Industry in Developing Countries," Discussion Papers DP 2013-15, Philippine Institute for Development Studies.
    3. Lukáš Čechura & Zdeňka Žáková Kroupová, 2021. "Technical Efficiency in the European Dairy Industry: Can We Observe Systematic Failures in the Efficiency of Input Use?," Sustainability, MDPI, vol. 13(4), pages 1-19, February.
    4. Maman Setiawan & Grigorios Emvalomatis & Alfons Oude Lansink, 2022. "Dynamics of industrial concentration and technical inefficiency in the Indonesian food and beverage industry," Agribusiness, John Wiley & Sons, Ltd., vol. 38(3), pages 734-739, July.
    5. Maman Setiawan & Grigorios Emvalomatis & Alfons Oude Lansink, 2013. "Structure, conduct, and performance: evidence from the Indonesian food and beverages industry," Empirical Economics, Springer, vol. 45(3), pages 1149-1165, December.
    6. Wahyu Widodo & Ruhul Salim & Harry Bloch, 2015. "The effects of agglomeration economies on technical efficiency of manufacturing firms: evidence from Indonesia," Applied Economics, Taylor & Francis Journals, vol. 47(31), pages 3258-3275, July.
    7. Sebastian Lakner & Thelma Brenes‐Muñoz & Bernhard Brümmer, 2017. "Technical Efficiency in Chilean Agribusiness Industry: A Metafrontier Approach," Agribusiness, John Wiley & Sons, Ltd., vol. 33(3), pages 302-323, June.
    8. Dimitrios Giokas & Nicolaos Eriotis & Ioannis Dokas, 2015. "Efficiency and productivity of the food and beverage listed firms in the pre-recession and recessionary periods in Greece," Applied Economics, Taylor & Francis Journals, vol. 47(19), pages 1927-1941, April.
    9. Zdeňka Náglová & Marie Šimpachová Pechrová, 2019. "Subsidies and technical efficiency of Czech food processing industry," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 65(4), pages 151-159.
    10. Ferry Syarifuddin & Maman Setiawan, 2022. "The Relationship between COVID-19 Pandemic, Foreign Direct Investment, and Gross Domestic Product in Indonesia," Sustainability, MDPI, vol. 14(5), pages 1-16, February.

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    More about this item

    Keywords

    Technical efficiency; Industrial concentration; Quiet-life hypothesis; Efficient-structure hypothesis; Data envelopment analysis (DEA);
    All these keywords.

    JEL classification:

    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L66 - Industrial Organization - - Industry Studies: Manufacturing - - - Food; Beverages; Cosmetics; Tobacco
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models

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