Measuring the Competition Index in the Indonesian Manufacturing Industry: The Structure–Conduct–Performance Paradigm

Abstract

This study proposed a fresh measure of the competition index in the Indonesian manufacturing industry during the period of 1990–2015. The competition index was estimated using indicators in the dimensions of the structure–conduct–performance paradigm. This research used principal component analysis to weigh the indicators in a dimension as well as to weigh the dimensions of the structure–conduct–performance in the final estimation of the competition index. This study found that the Indonesian manufacturing industry had a low competition. The dimension of structure had the highest contribution to the competition index compared to the dimensions of conduct and performance. The performance was also positively affected by the structure and conduct variables. This research contributed to the literature by providing a new competition index using the complete aggregated dimensions of structure, conduct, and performance. Policymakers could also use this competition index to indicate the level of competition in the industry as well as the sources of competition.