IDEAS home Printed from https://ideas.repec.org/a/eur/ejesjr/49.html
   My bibliography  Save this article

The Concentration-Profitability Relationship in Turkish Industry

Author

Listed:
  • Meral Ozhan

Abstract

The concept of industrial concentration refers to the control of a given industry by a small number of leading firms which are exclusively engaged in that industry. In economic theory concentration is an important concept to understand a departure away from competitive market structure which is accepted as a reference point for efficiency. Using the traditional structure-conduct-performance (SCP) paradigm many researchers found that the higher the level of concentration is the higher the level of profitability. In an earlier study I attempted to determine the level of concentration in the Turkish manufacturing industry for 84 sectors. In addition, I conducted a multiple regression analysis in various forms to identify the determinants of concentration and its effects on profitability. In most regression results, the relation between concentration and profitability was found positive and statistically significant. The present paper takes one step further and summarizes two new dimensions of industrial concentration. The first is to understand the current level of concentration for the Turkish manufacturing industry using a larger set of data. The new data set obtained from the TurkStat provides some basic statistics over the period 2009-2012 for 224 four-digit manufacturing industries. A brief analysis of the current data shows a slightly declining trend in the overall concentration ratio. CR4 (four-firm concentration ratio) fell from 51 to 49, CR8 (8-frim concentration ratio) fell from 61 to 60, and HHI (or H for short, Herfindahl-Hirschman index) dropped from 0. 173 (or from 1730) to 0. 153 (or to 1530). However a much bigger drop is observed for a longer period in the data coming from the top 500 industrial firms of ICC (Istanbul Chamber of Commerce). The latter data show a sharp fall in CR8 from 32 percent to 24 percent. These results together reflect a falling tendency in the dominant role of large firms in the Turkish economy which is a sign of increased level of competitive environment.

Suggested Citation

  • Meral Ozhan, 2015. "The Concentration-Profitability Relationship in Turkish Industry," European Journal of Economics and Business Studies Articles, Revistia Research and Publishing, vol. 1, ejes_v1_i.
    • Handle: RePEc:eur:ejesjr:49
    DOI: 10.26417/ejes.v3i1.p172-184
    as

    Download full text from publisher

    File URL: https://brucol.be/index.php/ejes/article/view/5254
    Download Restriction: no
    File URL: https://brucol.be/files/articles/ejes_v1_i3_15/Meral.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.26417/ejes.v3i1.p172-184?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Petar Sopek, 2011. "Testing the sustainability of the Croatian public debt with dynamic models," Financial Theory and Practice, Institute of Public Finance, vol. 35(4), pages 413-442.
    2. De Borger, Bruno & Kerstens, Kristiaan, 1996. "Cost efficiency of Belgian local governments: A comparative analysis of FDH, DEA, and econometric approaches," Regional Science and Urban Economics, Elsevier, vol. 26(2), pages 145-170, April.
    3. Alfonso ARPAIA & Alessandro TURRINI, 2008. "Government Expenditure and Economic Growth in the EU: Long-Run Tendencies and Short-Term Adjustment," EcoMod2008 23800006, EcoMod.
    4. Mr. Francesco Grigoli, 2012. "Public Expenditure in the Slovak Republic: Composition and Technical Efficiency," IMF Working Papers 2012/173, International Monetary Fund.
    5. Mr. Benedict J. Clements, 1999. "The Efficiency of Education Expenditure in Portugal," IMF Working Papers 1999/179, International Monetary Fund.
    6. Ms. Victoria Gunnarsson & Stéphane Carcillo & Marijn Verhoeven, 2007. "Education and Health in G7 Countries: Achieving Better Outcomes with Less Spending," IMF Working Papers 2007/263, International Monetary Fund.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Christl, Michael & Köppl-Turyna, Monika & Kucsera, Dénes, 2018. "Public sector efficiency in Europe: Long-run trends, recent developments and determinants," Working Papers 14, Agenda Austria.
    2. repec:jle:journl:165 is not listed on IDEAS
    3. Kristiaan Kerstens & Ignace Van de Woestyne, 2018. "Enumeration algorithms for FDH directional distance functions under different returns to scale assumptions," Annals of Operations Research, Springer, vol. 271(2), pages 1067-1078, December.
    4. Fernando Antonio Slaibe Postali, 2016. "Oil windfalls and X-inefficiency: evidence from Brazil," Journal of Economic Studies, Emerald Group Publishing Limited, vol. 43(5), pages 699-718, October.
    5. Akai, Nobuo & Sato, Motohiro, 2008. "Too big or too small? A synthetic view of the commitment problem of interregional transfers," Journal of Urban Economics, Elsevier, vol. 64(3), pages 551-559, November.
    6. Norman Gemmell & Patrick Nolan & Grant Scobie, 2017. "Public sector productivity: Quality adjusting sector-level data on New Zealand schools," Working Papers 2017/02, New Zealand Productivity Commission.
    7. Simar, Leopold & Wilson, Paul W., 2007. "Estimation and inference in two-stage, semi-parametric models of production processes," Journal of Econometrics, Elsevier, vol. 136(1), pages 31-64, January.
    8. Samet Güner & Erman Coşkun, 2016. "Determining the best performing benchmarks for transit routes with a multi-objective model: the implementation and a critique of the two-model approach," Public Transport, Springer, vol. 8(2), pages 205-224, September.
    9. Ana Poças & Elias Soukiazis, 2010. "Health Status Determinants in the OECD Countries. A Panel Data Approach with Endogenous Regressors," GEMF Working Papers 2010-04, GEMF, Faculty of Economics, University of Coimbra.
    10. J. Cummins & Hongmin Zi, 1998. "Comparison of Frontier Efficiency Methods: An Application to the U.S. Life Insurance Industry," Journal of Productivity Analysis, Springer, vol. 10(2), pages 131-152, October.
    11. Brijesh C. Purohit, 2015. "Efficiency in Education Sector: A Case of Rajasthan State (India)," Working Papers 2015-121, Madras School of Economics,Chennai,India.
    12. Manuel E. Lago & Santiago Lago-Peñas & Jorge Martinez-Vazquez, 2024. "On the effects of intergovernmental grants: a survey," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 31(3), pages 856-908, June.
    13. Mutiu Abimbola Oyinlola & Abdulfatai Adedeji, 2019. "Human capital, financial sector development and inclusive growth in sub-Saharan Africa," Economic Change and Restructuring, Springer, vol. 52(1), pages 43-66, February.
    14. Simar, Leopold & Wilson, Paul, 2018. "Technical, Allocative and Overall Efficiency: Inference and Hypothesis Testing," LIDAM Discussion Papers ISBA 2018018, Université catholique de Louvain, Institute of Statistics, Biostatistics and Actuarial Sciences (ISBA).
    15. Philippe K. Widmer & Peter Zweifel, 2008. "Public Good Provision in a Federalist Country: Tiebout Competition, Fiscal Equalization, and Incentives for Efficiency in Switzerland," SOI - Working Papers 0804, Socioeconomic Institute - University of Zurich, revised Dec 2010.
    16. Aurel IANCU & Dan Constantin OLTEANU, 2022. "Procyclical and Countercyclical Fiscal Policies in Non-Euro EU Member Countries," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(3), pages 188-205, October.
    17. Ursel Baumann, 2014. "Has US Household Deleveraging Ended? A Model-Based Estimate of Equilibrium Debt," Working Papers w201404, Banco de Portugal, Economics and Research Department.
    18. António Afonso & Ana Venâncio, 2020. "Local territorial reform and regional spending efficiency," Local Government Studies, Taylor & Francis Journals, vol. 46(6), pages 888-910, November.
    19. Maria Teresa Balaguer-Coll & Diego Prior & Emili Tortosa-Ausina, 2010. "Devolution Dynamics of Spanish Local Government," Environment and Planning A, , vol. 42(6), pages 1476-1495, June.
    20. Heikki A. Loikkanen & Ilkka Susiluoto, 2004. "Cost Efficiency of Finnish Municipalities 1994-2002. An Application of DEA and Tobit methods," ERSA conference papers ersa04p283, European Regional Science Association.
    21. Geys, Benny & Konrad, Kai A., . "Federalism and optimal allocation across levels of governance," Chapters in Economics,, University of Munich, Department of Economics.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eur:ejesjr:49. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Revistia Research and Publishing (email available below). General contact details of provider: https://revistia.com/index.php/ejes .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.