IDEAS home Printed from https://ideas.repec.org/a/taf/applec/v50y2018i15p1694-1715.html
   My bibliography  Save this article

Market structure and competition in transition: results from a spatial analysis

Author

Listed:
  • Martin Lábaj
  • Karol Morvay
  • Peter Silanič
  • Christoph Weiss
  • Biliana Yontcheva

Abstract

The present article provides first microlevel (indirect) empirical evidence on changes in entry barriers, the determinants of firm profitability as well as the nature of competition for a transition economy. We estimate size thresholds required to support different numbers of firms for several retail and professional service industries in a large number of geographic markets in Slovakia. The 3 time periods in the analysis (1995, 2001 and 2010) characterize different stages of the transition process. Specific emphasis is given to spatial spill-over effects between local markets. Estimation results obtained from a spatial ordered probit model suggest that entry barriers have declined considerably (except for restaurants) and that the intensity of competition has increased on average. We further find that demand spill-overs and/or the effects associated with a positive correlation in unobservable explanatory variables seem to outweigh negative spill-over effects caused by competitive forces between neighbouring cities and villages. The importance of these spatial spill-over effects differs across industries.

Suggested Citation

  • Martin Lábaj & Karol Morvay & Peter Silanič & Christoph Weiss & Biliana Yontcheva, 2018. "Market structure and competition in transition: results from a spatial analysis," Applied Economics, Taylor & Francis Journals, vol. 50(15), pages 1694-1715, March.
    • Handle: RePEc:taf:applec:v:50:y:2018:i:15:p:1694-1715
    DOI: 10.1080/00036846.2017.1374535
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/00036846.2017.1374535
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/00036846.2017.1374535?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
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Martin Carree & Marcus Dejardin, 2007. "‘Entry Thresholds and Actual Entry and Exit in Local Markets’," Small Business Economics, Springer, vol. 29(1), pages 203-212, June.
    2. Saul Estrin, 2002. "Competition and Corporate Governance in Transition," Journal of Economic Perspectives, American Economic Association, vol. 16(1), pages 101-124, Winter.
    3. Catherine Schaumans & Frank Verboven, 2015. "Entry and Competition in Differentiated Products Markets," The Review of Economics and Statistics, MIT Press, vol. 97(1), pages 195-209, March.
    4. J. Levin & L. Einav, 2012. "Empirical Industrial Organization: A Progress Report," Voprosy Ekonomiki, NP Voprosy Ekonomiki, issue 1.
    5. Berry, Steven T, 1992. "Estimation of a Model of Entry in the Airline Industry," Econometrica, Econometric Society, vol. 60(4), pages 889-917, July.
    6. Jaap H. Abbring & Jeffrey R. Campbell, 2010. "Last-In First-Out Oligopoly Dynamics," Econometrica, Econometric Society, vol. 78(5), pages 1491-1527, September.
    7. Peter Davis, 2006. "Spatial competition in retail markets: movie theaters," RAND Journal of Economics, The RAND Corporation, vol. 37(4), pages 964-982, December.
    8. Timothy F. Bresnahan & Peter C. Reiss, 1990. "Entry in Monopoly Market," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 57(4), pages 531-553.
    9. Jitka Bartošová & Tomáš Želinský, 2013. "The extent of poverty in the Czech and Slovak Republics 15 years after the split," Post-Communist Economies, Taylor & Francis Journals, vol. 25(1), pages 119-131, March.
    10. Catherine Schaumans & Frank Verboven, 2008. "Entry and regulation: evidence from health care professions," RAND Journal of Economics, RAND Corporation, vol. 39(4), pages 949-972, December.
    11. Stefan Bojnec & Ana Xavier, 2004. "Entry and exit in transition economies: the Slovenian manufacturing sector," Post-Communist Economies, Taylor & Francis Journals, vol. 16(2), pages 191-214.
    12. Steven Berry & Joel Waldfogel, 2010. "Product Quality And Market Size," Journal of Industrial Economics, Wiley Blackwell, vol. 58(1), pages 1-31, March.
    13. Jeffrey R. Campbell & Hugo A. Hopenhayn, 2005. "Market Size Matters," Journal of Industrial Economics, Wiley Blackwell, vol. 53(1), pages 1-25, March.
    14. Allan Collard-Wexler Jr., 2014. "Mergers and Sunk Costs: An Application to the Ready-Mix Concrete Industry," American Economic Journal: Microeconomics, American Economic Association, vol. 6(4), pages 407-447, November.
    15. Peter Davis, 2006. "Spatial competition in retail markets: movie theaters," RAND Journal of Economics, RAND Corporation, vol. 37(4), pages 964-982, December.
    16. Svetlana Avdasheva & Andrei Shastitko & Boris Kuznetsov, 2007. "Competition and Industrial Organisation in Transition Markets: What Can We Derive from Empirical Studies?," Post-Communist Economies, Taylor & Francis Journals, vol. 19(1), pages 17-33.
    17. Paul L. E. Grieco, 2014. "Discrete games with flexible information structures: an application to local grocery markets," RAND Journal of Economics, RAND Corporation, vol. 45(2), pages 303-340, June.
    18. Victor Aguirregabiria & Junichi Suzuki, 2015. "Empirical Games of Market Entry and Spatial Competition in Retail Industries," Working Papers tecipa-534, University of Toronto, Department of Economics.
    19. Ariel Pakes & Michael Ostrovsky & Steven Berry, 2007. "Simple estimators for the parameters of discrete dynamic games (with entry/exit examples)," RAND Journal of Economics, RAND Corporation, vol. 38(2), pages 373-399, June.
    20. Michael J. Mazzeo, 2002. "Product Choice and Oligopoly Market Structure," RAND Journal of Economics, The RAND Corporation, vol. 33(2), pages 221-242, Summer.
    21. Barbara Roberts & Steve Thompson, 2003. "Entry and Exit in a Transition Economy: The Case of Poland," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 22(3), pages 225-243, May.
    22. Bresnahan, Timothy F & Reiss, Peter C, 1991. "Entry and Competition in Concentrated Markets," Journal of Political Economy, University of Chicago Press, vol. 99(5), pages 977-1009, October.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Martin Lábaj & Alzbeta Siskovicova & Barbora Skalicanova & Peter Silanic & Christoph Weiss & Biliana Yontcheva, 2015. "Market Structure and Competition in the Health-care Industry: Results from a Transition Economy," Department of Economic Policy Working Paper Series 010, Department of Economic Policy, Faculty of National Economy, University of Economics in Bratislava.
    2. Martin Lábaj & Peter Silanič & Christoph Weiss & Biliana Yontcheva, 2018. "Market structure and competition in the healthcare industry," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 19(8), pages 1087-1110, November.
    3. Pennerstorfer, Dieter & Yontcheva, Biliana, 2021. "Local market definition in competition analysis: An application to entry models," Economics Letters, Elsevier, vol. 198(C).
    4. Martin Lábaj & Peter Mandžak, 2022. "Entry and Competition of Healthcare Providers in Slovakia: A Spatial Analysis," Journal of Economics / Ekonomicky casopis, Institute of Economic Research, Slovak Academy of Sciences, vol. 70(3), pages 211-236, March.
    5. Dieter Pennerstorfer & Biliana Yontcheva, 2019. "How to Draw the Line: A Note on Local Market Definition," Economics working papers 2019-17, Department of Economics, Johannes Kepler University Linz, Austria.
    6. Marina Sheresheva & Lilia Valitova & Maria Tsenzharik & Matvey Oborin, 2020. "Industrial Life-Cycle and the Development of the Russian Tourism Industry," JRFM, MDPI, vol. 13(6), pages 1-10, June.
    7. Silajdzic Sabina & Mehic Eldin, 2018. "Do Environmental Taxes Pay Off? The Impact of Energy and Transport Taxes on CO2 Emissions in Transition Economies," South East European Journal of Economics and Business, Sciendo, vol. 13(2), pages 126-143, December.

    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. Martin Lábaj & Karol Morvay & Peter Silaniè & Christoph Weiss, 2014. "Market Structure in Transition: Entry and Competition in Slovakia," Department of Economic Policy Working Paper Series 005, Department of Economic Policy, Faculty of National Economy, University of Economics in Bratislava.
    2. Liu, An-Hsiang & Siebert, Ralph B., 2022. "The competitive effects of declining entry costs over time: Evidence from the static random access memory market," International Journal of Industrial Organization, Elsevier, vol. 80(C).
    3. An-Hsiang Liu & Ralph Siebert, 2020. "The Competitive Effects of Declining Entry Costs over Time: Evidence from the Static Random Access Memory Market," CESifo Working Paper Series 8552, CESifo.
    4. Dieter Pennerstorfer & Biliana Yontcheva, 2019. "How to Draw the Line: A Note on Local Market Definition," Economics working papers 2019-17, Department of Economics, Johannes Kepler University Linz, Austria.
    5. Hackl, Franz & Kummer, Michael E. & Winter-Ebmer, Rudolf & Zulehner, Christine, 2014. "Market structure and market performance in E-commerce," European Economic Review, Elsevier, vol. 68(C), pages 199-218.
    6. Martin Lábaj & Peter Silanič & Christoph Weiss & Biliana Yontcheva, 2018. "Market structure and competition in the healthcare industry," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 19(8), pages 1087-1110, November.
    7. Catherine Schaumans & Frank Verboven, 2008. "Entry and regulation: evidence from health care professions," RAND Journal of Economics, RAND Corporation, vol. 39(4), pages 949-972, December.
    8. Martin Lábaj & Peter Silaniè & Christoph Weiss, 2013. "Entry and Competition in a Transition Economy: The Case of Slovakia," Department of Economic Policy Working Paper Series 003, Department of Economic Policy, Faculty of National Economy, University of Economics in Bratislava.
    9. Jeffrey R. Campbell & Thomas N. Hubbard, 2009. "The economics of of 'Radiator Springs:' Industry dynamics, sunk costs, and spatial demand shifts," Working Paper Series WP-09-24, Federal Reserve Bank of Chicago.
    10. Timothy Dunne & Shawn D. Klimek & Mark J. Roberts & Daniel Yi Xu, 2009. "The Dynamics of Market Structure and Market Size in Two Health Service Industries," NBER Chapters, in: Producer Dynamics: New Evidence from Micro Data, pages 303-327, National Bureau of Economic Research, Inc.
    11. Martin Lábaj & Alzbeta Siskovicova & Barbora Skalicanova & Peter Silanic & Christoph Weiss & Biliana Yontcheva, 2015. "Market Structure and Competition in the Health-care Industry: Results from a Transition Economy," Department of Economic Policy Working Paper Series 010, Department of Economic Policy, Faculty of National Economy, University of Economics in Bratislava.
    12. Mitsukuni Nishida, 2015. "Estimating a Model of Strategic Network Choice: The Convenience-Store Industry in Okinawa," Marketing Science, INFORMS, vol. 34(1), pages 20-38, January.
    13. Katja Seim & Joel Waldfogel, 2013. "Public Monopoly and Economic Efficiency: Evidence from the Pennsylvania Liquor Control Board's Entry Decisions," American Economic Review, American Economic Association, vol. 103(2), pages 831-862, April.
    14. Victor Aguirregabiria & Margaret Slade, 2017. "Empirical models of firms and industries," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 50(5), pages 1445-1488, December.
    15. Pesendorfer, Martin & Schmidt-Dengler, Philipp, 2003. "Identification and Estimation of Dynamic Games," CEPR Discussion Papers 3965, C.E.P.R. Discussion Papers.
    16. Xiao, Mo & Orazem, Peter F., 2011. "Does the fourth entrant make any difference?: Entry and competition in the early U.S. broadband market," International Journal of Industrial Organization, Elsevier, vol. 29(5), pages 547-561, September.
    17. Catherine Schaumans & Frank Verboven, 2015. "Entry and Competition in Differentiated Products Markets," The Review of Economics and Statistics, MIT Press, vol. 97(1), pages 195-209, March.
    18. Yoon, Jangsu, 2024. "Identification and estimation of sequential games of incomplete information with multiple equilibria," Journal of Econometrics, Elsevier, vol. 238(2).
    19. Paul Ellickson & Beresteanu Arie, 2005. "The Dynamics of Retail Oligopolies," 2005 Meeting Papers 829, Society for Economic Dynamics.
    20. Waldfogel, Joel, 2008. "The median voter and the median consumer: Local private goods and population composition," Journal of Urban Economics, Elsevier, vol. 63(2), pages 567-582, March.

    More about this item

    JEL classification:

    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

    Statistics

    Access and download statistics

    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:taf:applec:v:50:y:2018:i:15:p:1694-1715. 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: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/RAEC20 .

    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.