High Market Concentration Research Articles

What shapes international air transportation in Southern Africa? − The evidence considering the impact of Covid-19

The lack of intra-continental air connectivity in Africa has long been criticized. This paper aims to understand the factors determining intra-regional air transportation in the Southern Africa region and the impact of the COVID-19 pandemic. Firstly, we analyze the geospatial characteristics of the air transport network, airport connectivity, and market structure before and after the pandemic. We also examine the progress of air transport liberalization in Africa and its impact on market structure and airline privatization. We find that the liberalization facilitated market competition and the progress of privatization, but its influence didn’t sustain long. Secondly, based on monthly data at the city level from April 2012 to December 2021, using monthly Total Night-time Light Intensity (TNLI) as a proxy of gross regional product (GRP), we develop a gravity model to empirically investigate the determinants of international air passenger flows within Southern Africa. The analysis shows that the factors promoting air traffic include GRP, air transport liberalization, the presence of low-cost carriers, and airline privatization, while high market concentration and diplomatic disagreements hinder air passenger flows. The pandemic and associated government restriction measures have severely impacted intra-regional air transport connectivity, while the vaccination program has significantly contributed to the recovery of air transportation.

The road to sustainable development: exploring the impact of green technology innovation and environmental regulation on the green competitiveness of heavily polluting manufacturing industries

This study tests the impact of green technology innovation (GTI) from green innovation output (GTIO) and green innovation efficiency (GTIE) on green competitiveness (GTFP) and the non-linear moderating effect of environmental regulation (ERI) using a sample of 156 listed enterprises in heavily polluting manufacturing industries from 2016 to 2021. Results show that GTIO promotes GTFP, but GTIE inhibits GTFP. ERI has a significant “U-shaped” moderating effect between GTI and GTFP. Non-state-owned enterprises have relatively weak GTI ability but stronger sensitivity to ERI. Enterprises with high market concentration have outstanding GTI strength and can form positive interactions with ERI. High GTFP enterprises’ GTI has a more positive impact on GTFP, but the ERI is better coupled with GTIO in low GTFP enterprises. Our findings imply that policymakers should formulate appropriate environmental policies for enterprises in different situations, while enterprises should respond positively to ERI through multiple channels to enhance green competitiveness.

Foreign exchange risk and audit pricing: Evidence from U.S. multinational corporations

Foreign exchange volatility challenges auditors for not only demanding more audit efforts but also imposing heightened audit risk. We first show foreign exchange risks increase cash flow uncertainty and reduce financial reporting quality, supporting our premise that foreign exchange risks increase audit risk. Next, we find audit fees are higher for MNCs with greater exposure to foreign exchange volatility, but not when MNCs use financial hedging against foreign exchange risk. Furthermore, we show that the impact of foreign exchange risk on audit fees is attenuated by auditor MNC expertise, auditor busyness, and MNC’s operation diversity, whereas the impact is exacerbated for companies facing high pressure to avoid missing earnings targets and for auditors with high market concentration. Overall, our study provides novel evidence of the implications of MNCs’ exposure to foreign exchange risk on financial reporting and auditing, thereby enriching our understanding of MNCs.

Structure and performance of cassava markets: challenges of food security and connecting small farmers to markets in Cameroon

Agrifood markets play a pivotal role in assuring national food security and improved welfare for smallholder farm families. However, the extent to which this is possible depends on the structure and performance of these markets. This study utilizes primary data collected from 326 cassava marketers operating in 15 markets to examine the structure and performance of the cassava market in Cameroon. We employ parametric and non-parametric techniques to determine the degree of market concentration and marketing performance of these cassava marketers. Our findings highlight a high market concentration with a Gini coefficient (GC) of 0.76 and 0.79 for wholesalers and retailers, respectively. This indicates that the cassava market is probably oligopolistic in structure. In addition, we reveal that average marketing efficiency is 14.20% and 87% for retailers and wholesalers, respectively. This indicates that retailers are relatively inefficient as compared to wholesalers. Furthermore, we observed that prices are set up in the markets according to the place of sale and the type of marketers. However, prices are influenced by factors such as transport, the quantity sold in on-spot markets, and the need for liquidity. In general, our results highlight that the region, type of marketer (wholesaler or retailer), and socio-economic factors account significantly for the variation of odds to participate in markets. Hence, to influence the dynamics of price on the consumers, it might be necessary to promulgate policies that could improve retailers' efficiency. This might be through the restructuring of retailers into cooperatives and associations which may permit retailers to access other critical resources.

Market concentration and contracting out a public service – case study of the waste collection and disposal service in the municipalities in Central Slovakia

Market concentration of a public service is one of the factors influencing the risks associated with contracting out, as described by the principal-agent theory. A monopoly of the service producer (the agent) creates a space for enforcing the producers own interests but not those of a service provider (the principal), whose interest is to provide the public service effectively. Market concentration therefore affects the effectiveness of contracting out said service. The aim of the study is the identification of market concentration of the waste collection and disposal service as a factor affecting the cost effectiveness of contracting out and the contract management quality in the environment of Slovak municipalities. Market concentration is analyzed through a market concentration index, in this case the Herfindahl-Hirschman index. Findings of this study confirm the existence of a high market concentration of the service in the monitored municipalities.

Review: Ethical responsibilities and transformation strategies of focal companies in the meat supply chain: the implementation dilemma.

In Germany (and other Organisation for Economic Co-operation and Development countries), the need for a fundamental transformation of livestock farming has become increasingly evident in recent years. Two broad-based stakeholder commissions including the German farmers' association, the meat industry, and Non-Governmental Organizations have endorsed this demand. Nevertheless, major steps towards its implementation are still missing - a circumstance we refer to in this paper as the implementation dilemma. In a globalised economy, farmers cannot solve the problem of low animal welfare standards alone although they are important actors. Moreover, consumer behaviour is changing too slowly, and possibilities for granting more subsidies are limited in the face of multiple economic crises. Against this background, we argue for a stronger focus on voluntary (private) sustainability agreements. We therefore analyse how the German meat supply chain is organised and what responsibility and power the individual actors have to push the sector's transformation. Large slaughterhouses, processors, and the retailing sector seem promising due to their high market concentration and power. Especially retailers can influence the transformation of the market through their role as gatekeepers between suppliers and consumers. Based on business ethics principles of taking responsibility, we consider the focus on sustainability obligations of the retail sector to be ethically justified. However, it is then necessary to give the four retail groups dominating the meat chain in Germany more leeway for sustainability agreements in antitrust law.

Structural Characteristics and Conduct of Sweet Potato Market in Rachuonyo Region, Kenya: Perception of Sweet Potato Farmers and Traders

Myriad studies have been conducted on commodity markets in different parts of the world. However, such studies have yielded inconsistent results on various facets of market structure and market conduct, implying that each market may have its distinctive characteristics which impact on its performance. In Sub-Saharan Africa, the growth of sweet potato industry is hindered by lack of information on sweet potato market structural characteristics. Kenya’s sweet potato industry is facing a similar challenge. This scenario calls for a baseline survey on the sweet potato market structural characteristics and conduct as a basis for subsequent robust studies on the possible nexus between the market structure, conduct and performance of the industry. The study adopted a descriptive survey design based on interpretivism research paradigm. A sample size of 384 farmers, 166 retailers and 55 wholesalers were taken. Pretested questionnaires were used to gather perception of the respondents on various parameters based on a five-point Likert scale. The views were then summarized in terms of means scores. It was established that the sweet potato market was imperfect since there were notable elements of potato differentiation and barriers to entry into the market. Such barriers included competition from other traders and uncertainties in the demand for sweet potato. The situation was exacerbated by lack of suitable storage facilities given the perishable nature of the commodity. High market concentration was noted at the wholesale level, a likely indicator of price collusion and exploitation by the few large sellers that dominated the market. In this regard, there is need to enhance value addition activities that can enable the market players especially the farmers to be more competitive within the supply chain. Efforts should also be made to eliminate the identified market barriers

The evolution of global missile transactions between the 1950s and 2010s

Since they emerged as modern weapons, missiles have been consolidated as an important defense product, with high technological potential and increasingly widespread use. Aiming to better understand its dynamics of consolidation and diffusion, this article proposes to carry out a comprehensive exploratory data analysis of the evolution of global missile transactions in the period from the 1950s to the 2010s. The results attest 1) to the expressive growth of the international transfers of missiles about the other categories of defense products, jumping from the seventh position in the 1950s to consolidate as the third most prominent transferred weapon category in the 2010s, 2) to the high market concentration at the level of missile suppliers, with only three countries – United States, Soviet Union/Russia, and France – concentrating average exports of 84.6% of the total flows over the decades, and 3) to the relatively less stable pattern at the level of acquisition, with substantial changes in the classification among the largest missile importers from the decisive influence motivated by geopolitical events.

The Measure of Concentration of Audit Markets in Public Interest Entities in the Czech Republic and Slovakia

Abstract The aim of the paper is to determine whether the audit market for public interest entities in the Czech and Slovak Republic has been still concentrated and subsequently to determine the measure of concentration. The article consists of data including information from audit entities that perform statutory audit of public interest entities in the Czech Republic and Slovakia on timeline 2017–2020. On the level of competition is identified by the Herfindahl-Hirschman Index and the CR4 Index, using the revenues of statutory audit as a basis for calculating market shares. The results show that the Czech and Slovak audit markets for public interest entities have been highly concentrated, with a higher measure of concentration in the Czech Republic (HHI 0.25) than in Slovakia (HHI 0.23). The Big Four has had a market share of between 90% (Slovakia) and 95% (Czech Republic) in both countries, with the four firms have been providing up to 70% of all statutory audits within public interest entities. At the same time, KPMG and PWC have had the strongest market position. The paper provides new evidence on audit market concentration of public interest entities in the Czech Republic and Slovakia in the context of development in recent years, and thus can be the basis for a subsequent discussion of the consequences associated with high market concentration.

The EURIBOR surge and bank deposit costs: an investigation of interest rate pass-through and deposit portfolio rebalancing

Against the backdrop of sharp monetary policy tightening, this article studies the links between bank deposit costs and the EURIBOR. In doing so the authors employ an SVAR multivariate model that jointly includes deposit rates and volumes, fitted on monthly data covering the period 2003-2019. Increases in the EURIBOR are found to pass through to bank deposit rates in Spain, pushing up interest rates on term deposits in particular. In turn, increases in the EURIBOR triggered shifts from sight to term deposits. Through both mechanisms, bank deposit costs increased. The article documents that in 2022 the pass-through from the EURIBOR to deposit rates is falling short, relative to what would be expected according to the historical pattern captured by model results; as a result, the increase in bank deposit costs has been weaker than expected. To draw insights into the reasons behind this pattern, the authors analyse several euro area economies. Correlation analyses suggest that the impact of the EURIBOR on deposit rates and costs was weaker in banking sectors with greater excess liquidity and higher market concentration.

Kalecki meets Schumpeter: The decline of competition in a demand‐led dynamic model

AbstractThis paper contributes to the post‐Keynesian literature by building a macrodynamic Kaleckian model that incorporates recent evidence on market concentration and its relationship with capital accumulation and income distribution using Schumpeterian insights. This is done in two steps. First, we model a two‐dimensional system that sets the dynamics between the wage share and the capital‐effective labor supply ratio. Then, we extend the model, in the second step, to a three‐dimensional system that incorporates the state‐transition function of concentration. Our model suggests that higher market concentration may be associated with a permanent decline in employment, capacity utilization, wage share, and capital accumulation.

The structure of the Canadian packaged food and non-alcoholic beverage manufacturing and grocery retailing sectors through a public health lens

BackgroundCorporate power has been recognized as an important influence on food environments and population health more broadly. Understanding the structure of national food and beverage markets can provide important insight into the power held by leading corporations. This study aimed to descriptively analyze the structure of the Canadian food and beverage manufacturing and grocery retailing sectors as of 2020/21.MethodsPackaged food manufacturers, non-alcoholic beverage manufacturers and grocery retailers with ≥ 1% market share in 2020/21 in Canada as per Euromonitor International were identified and characterized. Proportion of market share held by public vs private, multinational vs national, and foreign multinational companies was assessed for the 3 sectors. The concentration of 14 packaged food, 8 non-alcoholic beverage and 5 grocery retailing markets was assessed using the Herfindahl–Hirschman Index (HHI) and the four firm concentration ratio (CR4) (HHI > 1800 and CR4 > 60 suggest high market concentration). Company ownership structure was also assessed, including common ownership of public companies by three of the largest global asset managers using data from Refinitiv Eikon, a financial market database.ResultsThe Canadian non-alcoholic beverage manufacturing sector, and, to a lesser extent, the packaged food manufacturing sector were dominated by foreign multinational companies, in contrast with the grocery retailing sector which was dominated by national companies. Market concentration varied across sectors and markets but was substantially greater within the retailing (median CR4 = 84; median HHI = 2405) and non-alcoholic beverage sectors (median CR4 = 72; median HHI = 1995) compared to the packaged food sector (median CR4 = 51; median HHI = 932). There was considerable evidence of common ownership across sectors. Overall, the Vanguard Group Inc owned at least 1% of shares in 95% of publicly listed companies, Blackrock Institutional Trust Company 71%, and State Street Global Advisors (US) 43%.ConclusionsThe Canadian packaged food and non-alcoholic beverage manufacturing and grocery retailing sectors include several consolidated markets, with a high degree of common ownership by major investors. Findings suggest that a small number of large corporations, particularly in the retailing sector, have extensive power to influence Canadian food environments; their policies and practices warrant substantial attention as part of efforts to improve population diets in Canada.

Does the greening of the tax system promote the green transformation of China’s heavily polluting enterprises?

Climate change and pollution are the major environmental problems facing the world today. The emission of industrial pollution is not only related to the development of low carbon and green economy but also affects the ecological environment and climate change of human beings. The greening of the tax system is an important reform to help China's green development. From the perspective of internal green innovation and external legal pressure of heavily polluting enterprises, this paper discusses the impact mechanism of implementing the greening of the tax system on the green transformation of heavily polluting enterprises in China and uses DID model to conduct a quasi-natural experiment on the green transformation of heavily polluting enterprises in China. This paper finds that the implementation of the greening of the tax system has a significant impact on the green transformation of China's heavily polluting enterprises; the greening of the tax system policy realizes the "win-win" situation of green environmental governance and the development of heavily polluting enterprises through green technology innovation and forces heavily polluting enterprises in China to conduct environmental protection through the environmental legitimacy pressure. The effect of the greening of the tax system policy has obvious heterogeneity: The greening of the tax system has a more obvious improvement effect on heavily polluting enterprises with low and high market concentration. Compared with state-owned holding enterprises, non-state-owned holding enterprises are more significantly affected by the greening of the tax system. The positive impact of the greening of the tax system on the green transformation of heavily polluting enterprises is mainly reflected in enterprises with low financing costs, while it is not significant in enterprises with high financing costs. This paper enriches the research on the effect of green tax policy, explores solutions based on quasi-nature, and provides policy references for the green transformation of heavily polluting enterprises.

Long-Term Care Pharmacy Market Shares and Differences in Skilled Nursing Facilities Served

ABSTRACT Medications and pharmacy services are critical to post-acute care (PAC) in skilled nursing facilities (SNFs), yet little is known about the long-term care (LTC) pharmacies that provide them. We estimated the market shares of LTC pharmacies and how SNFs differed between pharmacies. This cross-sectional study used data from SNFs that provided PAC services in Rhode Island (RI) in 2019. We applied the parametric g-formula to compare SNF pharmacy-related deficiencies and medication use measures between LTC pharmacies while standardizing for SNF membership in a chain and number of beds. Among 75 SNFs, 68 (91%) were served by either Omnicare (n = 32, 43%) or PharMerica (n = 36, 48%), and 7 (9%) by other LTC pharmacies. After covariate adjustment, PharMerica SNFs had the lowest prevalences of any pharmacy-related deficiency (PharMerica, 63.2%; Omnicare, 80.2%; other LTC pharmacy, 69.1%) and antianxiety medication use (PharMerica, 9.7%; Omnicare, 13.6%; other LTC pharmacy, 13.5%), but estimates were imprecise. The RI market is highly concentrated between LTC pharmacies. If similarly high LTC pharmacy market concentration exists nationally, there is enormous promise for efficiently delivering interventions to improve medication management in SNFs. However, it may also present a risk of harm if policies do not maintain sufficient competition and innovation is stifled.

Heterogeneous Partners, R&D cooperation and corporate innovation capability: Evidence from Chinese manufacturing firms

In this paper, we examine the differential impact of cooperation with heterogeneous partners on firms' innovation capabilities. We use the number of joint patent applications of Chinese manufacturing firms from 2008 to 2018 to measure cooperation with different types of partners and the number of corporate patents to measure the innovation capability of firms. The results indicate that R&D cooperation with other enterprises, universities, and research institutions all have a significantly positive impact on the innovation capability of enterprises. However, R&D cooperation with universities or research institutions has a higher positive impact on innovation capability than that with other firms. Different internal and external factors moderate the relationship between heterogeneous partners and the innovation capability of firms. Specifically, firms with higher absorptive capacity will benefit more from R&D cooperation with corporate partners. In contrast, in industries with higher market concentration or where firms are at the technological frontier, cooperation with universities will positively impact their innovation capabilities. Further research demonstrates that absorptive capacity has a more positive moderating effect when the cooperation is between firms in the same industry, compared to R&D cooperation between firms in different industries.

Marketing of Fresh Imported Frozen Fish in Ilorin West Local Government Area of Kwara State, Nigeria

Women, (64.4%) dominated the marketing of imported frozen fish in study area and they were active economically. They were married(81.1%) with a relatively large family(6 or more members) that served as a source of labor; Most of the traders were Muslims(54.4%) while others were Christians showing that fish marketing is not affected by religious bigotry. Most of the marketers, (86.6%) had access to credit gotten from daily contribution collectors and trough cooperatives. Most respondents (74.4%) were in associations, where they paid membership dues and the Herfindahl index was 1.17%, which indicated high market concentration. Frozen fish marketing is profitable in the study area with a Marketing Margin of 47.36 %. Factors affecting profitability of fish marketing in the study area were Age, which is significant at 5% and it is negatively signed, Religion which is significant at 5% but also negatively signed, Household size, which is significant at 1% level and it is highly positively signed. Interest paid although against expectation is significant at 5% and positive; Other Business is positively significant at 1%. Amount paid as dues in the market and Fish type had negative signs

The Impact of Country Risks on the Dependence Patterns of International Cobalt Trade: A Network Analysis Method

Cobalt is a key resource for the global energy transition, and the differences in the natural endowment of cobalt have led to frequent cobalt trade among countries. This study aims to reveal the dependence patterns of cobalt trade among countries and the impact of country risks (including political and economic risks) on the patterns. First, a cobalt import dependence network (CIDN) and a cobalt export dependence network (CEDN) are established using the network analysis method. Furthermore, this study uses network indicators to reveal the dependence patterns of cobalt trade among countries, and construct diversification indices of trade relations to further analyze the import source risk and the market concentration of cobalt trade. The results indicate that most cobalt importers have a high import source risk, and most cobalt exporters have a high market concentration. Finally, based on the panel regression methods, we reveal an interesting result showing that the dependence patterns of cobalt trade are significantly influenced by country risks. Specifically, on the one hand, for importers, an increase in political risk or economic risk has a negative impact on their dependence patterns of cobalt trade. On the other hand, for exporters, an increase in political risk or economic risk has different effects on their dependence patterns of cobalt trade. This study suggests that countries should pay more attention to the role of country risks in driving the dependence patterns when making cobalt trade policies.

Transnational Banking Supervision, Distance-to-Distress and Credit Risk: the SSM Case

ABSTRACT We assess the impact of adopting a transnational supervisor on the distance-to-distress and credit risk of large and complex banks, exploring the establishment of the Single Supervisory Mechanism (SSM) in 2014 as a quasi-natural experiment. Using a differences-in-differences approach, we compare SSM banks vis-à-vis banks with a similar size and complexity operating in European countries outside the SSM. Our results suggest that adopting a transnational supervisor increases the distance-to-distress, particularly for banks operating in countries with larger banking sectors, higher market concentration and greater supervisory discretion. We also show that SSM banks reduced loan loss reserves and NPLs significantly more than non-SSM banks, but only among the most capitalized banks – which is consistent with the notion that well-capitalized banks are better able to weather haircuts induced by credit risk reduction initiatives. Interestingly, we find that SSM banks from countries with greater supervisory discretion saw their NPLs increase in the first years of the SSM, which could reflect the elimination of national idiosyncrasies in credit risk accounting. In general, the evidence presented in our paper suggests that transnational supervision bears a superior ability to increase the distance-to-distress, reduce credit risk, and harmonize supervisory practices among large and complex banks.

Early bird or early worm? First-mover (dis)advantages and the success of web-based social enterprises

Achieving the optimal market entry time is of immense strategic importance for entrepreneurs, especially in online markets, where web-based social entrepreneurial activity continues to grow. This raises the question of whether first-mover market entry actually pays off or if market entry as a (later) follower might be the better option. First-mover research has so far not adequately answered this question. Our work contributes to closing this gap by transferring first-mover theory to web-based social enterprises. We expand upon first-mover theory by reflecting on the winner-take-all hypothesis to better illuminate the mechanisms of market structure development and entry decisions. Our empirical data was gathered on various types of web-based social enterprise models in a sample of 12 national markets. Our results show that first-mover advantages are available not only to those who are the very first to market but also to early followers. In addition, the speed of market entry matters. Our work also indicates, however, that first-mover advantages should not be overestimated; market structures and network effects may explain varying results. Furthermore, both business models studied exhibited high market concentration at a mature stage, implying that the winner, although perhaps not taking all, does take most.

Being small at the right moment: Path dependence after a shift in the technological regime

Abstract This paper explores the impact of technological change on industry concentration and the underlying firm dynamics. Within the agent-based model EURACE@Unibi, it is shown that an exogenous acceleration in technological change in the capital goods sector leads to a diverging firm population in the downstream consumption goods sector in terms of productivities and skills and in turn also to a higher market concentration. A novel ex-post analysis at the micro level shows that the later dominant firms were relatively small at the beginning but benefited from a virtuous cycle between their capital choice and the skill level within their workforce that is initiated by a fortunate outcome on the labor market.