IDEAS home Printed from https://ideas.repec.org/p/phs/dpaper/201605.html
   My bibliography  Save this paper

Conglopolistic Competition in Small Emerging Economies: When Large and Diversified is Beautiful

Author

Listed:
  • Raul V. Fabella

    (School of Economics, University of the Philippines Diliman
    National Academy of Science and Technology)

Abstract

The economic catch-up of the East Asian miracle economies went hand-in-hand with the emergence and even dominance of large private or quasi-state business groups such as the Zaibatsus in the pre-WWII and the Keiretsus of the post-WWII Japan, the Chaebols of South Korea and the Taipan-led business empires of South and South East Asia. The dominance of the so-called Robber Barons in the Gilded Age of the USA catch-up era (1870-1900) was of the same genre. The natural vent for size among firms, following the Williamson make or buy logic, manifests itself as vertical integration in large economies; in small economies, it manifests itself as horizontal integration or conglomeracy. The motivations are underdeveloped factor mainly capital and insurance markets. Weak public ordering also motivates size as firms to vertically integrate into private ordering to resist official and unofficial predation. Conglopolistic competition, the competition among conglomerates in many markets, is largely in the non-traded goods sectors where foreign competition is not felt and market saturation is quickly attained. We give show how conglopolistic competition is welfare-improving and give examples of how it boosts the collective action capacity of the weak Philippine state. The dynamism of the Philippine Service sector is due to lively conglopolistic competition which in turn comes from relatively free entry (apart from large capital cost) in these sectors. It is imperative to attract conglopolistic competition in the traded goods sector especially in industrial agriculture. We identify fragmentation of farm land and the 5-hectare ownership ceiling as the one barrier preventing the entry of conglopolistic competition in agriculture.

Suggested Citation

  • Raul V. Fabella, 2016. "Conglopolistic Competition in Small Emerging Economies: When Large and Diversified is Beautiful," UP School of Economics Discussion Papers 201605, University of the Philippines School of Economics.
  • Handle: RePEc:phs:dpaper:201605
    as

    Download full text from publisher

    File URL: http://www.econ.upd.edu.ph/dp/index.php/dp/article/view/1492
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Dani Rodrik, 2008. "The Real Exchange Rate and Economic Growth," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 39(2 (Fall)), pages 365-439.
    2. Dasgupta, Partha & Stiglitz, Joseph, 1980. "Industrial Structure and the Nature of Innovative Activity," Economic Journal, Royal Economic Society, vol. 90(358), pages 266-293, June.
    3. Mary M. Shirley, 2005. "Institutions and Development," Springer Books, in: Claude Menard & Mary M. Shirley (ed.), Handbook of New Institutional Economics, chapter 24, pages 611-638, Springer.
    4. Neumann, Manfred & Weigand, Jurgen & Gross, Alexandra & Munter, Markus Thomas, 2001. "Market size, fixed costs and horizontal concentration," International Journal of Industrial Organization, Elsevier, vol. 19(5), pages 823-840, April.
    5. Douglass C. North, 2005. "Introduction to Understanding the Process of Economic Change," Introductory Chapters, in: Understanding the Process of Economic Change, Princeton University Press.
    6. Acemoglu, Daron, 2003. "Why not a political Coase theorem? Social conflict, commitment, and politics," Journal of Comparative Economics, Elsevier, vol. 31(4), pages 620-652, December.
    7. Claude Menard & Mary M. Shirley (ed.), 2005. "Handbook of New Institutional Economics," Springer Books, Springer, number 978-0-387-25092-2, June.
    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. Bangwayo-Skeete, Prosper F. & Rahim, Afaf H. & Zikhali, Precious, 2011. "Does education engender cultural values that matter for economic growth?," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 40(2), pages 163-171, April.
    2. repec:spo:wpecon:info:hdl:2441/6824 is not listed on IDEAS
    3. repec:hal:spmain:info:hdl:2441/6824 is not listed on IDEAS
    4. Jérôme Sgard, 2006. "Do legal origins matter? The case of bankruptcy laws in Europe 1808-1914," Post-Print hal-01021354, HAL.
    5. repec:hal:wpspec:info:hdl:2441/6824 is not listed on IDEAS
    6. repec:spo:wpmain:info:hdl:2441/6824 is not listed on IDEAS
    7. repec:spo:wpmain:info:hdl:2441/8221 is not listed on IDEAS
    8. Beck, Thorsten & Demirguc-Kunt, Asli & Levine, Ross, 2006. "Bank supervision and corruption in lending," Journal of Monetary Economics, Elsevier, vol. 53(8), pages 2131-2163, November.
    9. Sanchez-Pages Santiago & Straub Stéphane, 2010. "The Emergence of Institutions," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 10(1), pages 1-38, September.
    10. Sengupta, Rajdeep, 2007. "Foreign entry and bank competition," Journal of Financial Economics, Elsevier, vol. 84(2), pages 502-528, May.
    11. Ararat, Melsa & Claessens, Stijn & Yurtoglu, B. Burcin, 2021. "Corporate governance in emerging markets: A selective review and an agenda for future research," Emerging Markets Review, Elsevier, vol. 48(C).
    12. Coyne, Christopher J. & Mathers, Rachel L., 2011. "Rituals: An economic interpretation," Journal of Economic Behavior & Organization, Elsevier, vol. 78(1), pages 74-84.
    13. Ng, Adam & Dewandaru, Ginanjar & Ibrahim, Mansor H., 2015. "Property rights and the stock market-growth nexus," The North American Journal of Economics and Finance, Elsevier, vol. 32(C), pages 48-63.
    14. Zhang, Tingting (Grace) & You, Yu, 2021. "Scale or efficiency? Performance shortfall and engagement in production activities of foreign subsidiaries in China," Journal of International Management, Elsevier, vol. 27(1).
    15. Frank O. Kwabi & Agyenim Boateng & Emmanuel Adegbite, 2019. "International equity portfolio investment and enforcement of insider trading laws: a cross-country analysis," Review of Quantitative Finance and Accounting, Springer, vol. 53(2), pages 327-349, August.
    16. Beck Thorsten & Büyükkarabacak Berrak & Rioja Felix K. & Valev Neven T., 2012. "Who Gets the Credit? And Does It Matter? Household vs. Firm Lending Across Countries," The B.E. Journal of Macroeconomics, De Gruyter, vol. 12(1), pages 1-46, March.
    17. Paolo Buccirossi & Lorenzo Ciari & Tomaso Duso & Giancarlo Spagnolo & Cristiana Vitale, 2013. "Competition Policy and Productivity Growth: An Empirical Assessment," The Review of Economics and Statistics, MIT Press, vol. 95(4), pages 1324-1336, October.
    18. Orihuela, José Carlos & Mendieta, Arturo & Pérez, Carlos & Ramírez, Tania, 2021. "From paper institutions to bureaucratic autonomy: Institutional change as a resource curse remedy," World Development, Elsevier, vol. 143(C).
    19. Bhattacharyya, Sambit & Hodler, Roland, 2014. "Do Natural Resource Revenues Hinder Financial Development? The Role of Political Institutions," World Development, Elsevier, vol. 57(C), pages 101-113.
    20. James R. Brown & Gustav Martinsson & Bruce C. Petersen, 2013. "Law, Stock Markets, and Innovation," Journal of Finance, American Finance Association, vol. 68(4), pages 1517-1549, August.
    21. Emenalo, Chukwunonye O. & Gagliardi, Francesca, 2020. "Is current institutional quality linked to legal origins and disease endowments? Evidence from Africa," Research in International Business and Finance, Elsevier, vol. 52(C).
    22. Frank H. Stephen & David Urbano & Stefan van Hemmen, 2005. "The impact of institutions on entrepreneurial activity," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 26(7), pages 413-419.
    23. Abdallah Zouache, 2014. "De la question coloniale chez les anciens et néo-institutionnalistes," Revue d'économie politique, Dalloz, vol. 124(1), pages 129-149.
    24. Luca Anderlini & Leonardo Felli & Giovanni Immordino & Alessandro Riboni, 2013. "Legal Institutions, Innovation, And Growth," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 54(3), pages 937-956, August.
    25. Thorsten Beck, 2013. "Finance, growth and fragility: the role of government," International Journal of Banking, Accounting and Finance, Inderscience Enterprises Ltd, vol. 5(1/2), pages 49-77.

    More about this item

    Keywords

    Conglomerates; horizontal integration; small emerging markets; conglopolism; non-traded goods sector;
    All these keywords.

    JEL classification:

    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:phs:dpaper:201605. 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: RT Campos (email available below). General contact details of provider: https://edirc.repec.org/data/seupdph.html .

    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.