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Structure, conduct, and performance: evidence from the Indonesian food and beverages industry

Author

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  • Maman Setiawan
  • Grigorios Emvalomatis
  • Alfons Oude Lansink

Abstract

This article employs the Structure–Conduct–Performance (SCP) paradigm to investigate the simultaneous relationship between industrial concentration, price rigidity, technical efficiency, and price-cost margin in the Indonesian food and beverages industry. This research extends the SCP framework by including price rigidity and technical efficiency as additional key variables. The results suggest that there is a simultaneous relationship between industrial concentration, price rigidity, technical efficiency, and price-cost margin with a positive bi-directional relationship between industrial concentration and price-cost margin. These findings imply that an appropriate course of action for the regulator in this highly concentrated industry is to reduce industrial concentration in order to increase competition, reduce upward price flexibility, and increase technical efficiency in the long run. Copyright Springer-Verlag Berlin Heidelberg 2013

Suggested Citation

  • 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.
    • Handle: RePEc:spr:empeco:v:45:y:2013:i:3:p:1149-1165
    DOI: 10.1007/s00181-012-0648-3
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    More about this item

    Keywords

    Structure–Conduct–Performance; Food and beverages industry; Panel data and simultaneous equations model; Technical efficiency; L10; L11; L13; C33; C36;
    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
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • C36 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Instrumental Variables (IV) Estimation

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