Level Of Market Concentration Research Articles

Competition and Firm Service Reliability Decisions: A Study of the Airline Industry

To understand the impact of competition on organizational service reliability decisions, this study investigates whether firms in the airline industry consider competitors’ actions when making their service reliability decisions. Using data from the U.S. Bureau of Transportation Statistics on flight cancellation rates and average length of flight delays, the authors use two complementary approaches, a simultaneous equation model and a discrete game framework, to examine competitive influence on firm decisions on the level of service reliability. The authors find that competitive effects are asymmetric and differ by the type of firm and its competitors—full-service versus low-cost airlines—as well by level of market concentration. The authors show that internal initiatives, such as on-time bonuses, can substantially improve service reliability but require the firm to account for competitive reactions. Ignoring competitive effects leads to an overestimation of the impact of these programs on service reliability levels.

Use of Flap Salvage for Lower Extremity Chronic Wounds Occurs Most Often in Competitive Hospital Markets.

Background:Wounds in the comorbid population require limb salvage to prevent amputation. Extensive health economics literature demonstrates that hospital activities are influenced by level of market concentration. The impact of competition and market concentration on limb salvage remains to be determined.Methods:Admissions for chronic lower extremity wounds in nonrural hospitals were identified in the 2010–2011 National Inpatient Survey using ICD-9-CM diagnosis codes. The study cohort consisted of admitted patients receiving amputations, salvage without flap techniques (eg, skin grafts), or salvage with flap techniques. The all-service Herfindahl–Hirschman Index (HHI), which is a commonly used tool for market and antitrust analyses, was used to measure hospital competition. Multinomial regression analysis accounting for the complex survey design of the NIS was used to determine the relationship between the HHI and hospital adoption of limb salvage controlling for patient, hospital, and market factors.Results:The study cohort represents 124,836 admissions nationally: 89,880 amputations, 26,715 salvage without flap techniques, and 8241 salvage flap techniques. Diabetics accounted for 64.1% of all study admissions. Hospitals in highly competitive markets performed more flaps for chronic lower extremity wounds than noncompetitive markets. Controlling for other factors, hospitals in highly competitive markets, relative to those in highly concentrated markets, were 2.48 percentage points more likely to perform limb salvage with flaps (P < 0.01). Other factors were less predictive.Conclusion:Increased hospital competition is the strongest systems-level predictor of receipt of lower extremity flaps among patients with chronic wounds. Improving access to reconstructive limb services must consider the competitive structure of hospital markets.

Judicial Response to the 2010 Horizontal Merger Guidelines

We study how the courts have responded to the 2010 Horizontal Merger Guidelines issued by the U.S. Department of Justice and the Federal Trade Commission. Looking at decided cases, we find that both the government and merging parties rely on the 2010 Guidelines in presenting their cases, each side respectively arguing that it should win if the court properly follows them. The 2010 Guidelines had the strongest effect on the case law in the area of unilateral effects, where a number of courts have embraced them in ways that clearly depart from earlier decisions. The case law now exhibits much greater receptivity to a government showing that the merger will lead to higher prices simply due to the loss of direct competition between the two merging firms. The courts also have followed the 2010 Guidelines by more willingly defining markets around targeted customers. We do not detect any effect on decided cases of the higher concentration thresholds found in the 2010 Guidelines. Both the average pre-merger level of market concentration and the average increase in market concentration alleged by the government in litigated cases to date declined after 2010.

Energy saving behavior in the marketing of startup projects and marketing activities of world high-tech enterprises

Methods. The results were obtained through the use of following methods: dialectical method of cognition, comparison and generalization – to clarify the concept of «energy-saving behavior of economic and social agents»; theories of marketing, logistics, competition and fuzzy logic and fuzzy plural numbers – when developing a methodological approach to the formation of product competitiveness aimed at respecting marketing energy-saving values; index approach – during the formation of the competitiveness index of high-tech enterprises; marketing, economic, graphic analysis – when calculating the sales volume of Siemens AG by regions of the world, establishing a variation in the maximum value of operating profitability in the areas of Siemens AG. Results. Components of energy-saving behavior of enterprises are defined, marketing activity and competitiveness of products of high-tech enterprise are investigated. The components of energy-saving behavior of enterprises are outlined in the interpretation of representatives of various scientific economic schools and organizations. It was found that the energy-saving behavior of economic and social agents reflects the integrated observance of the principles of the concept of sustainable development, aimed at safe interaction with the environment and the preservation of energy resources. The methodical approach of product competitiveness formation aimed at compliance with marketing energy-saving values on the principles of using fuzzy logic theory is proposed. It is determined that the competitiveness of enterprises is formed under the influence of such components as: the economic efficiency of the organization of e-logistics service, the success of marketing activities of fifth-level logistics virtual operators, the level of market concentration, the volume of demand and supply. The marketing activity of the international concern Siemens AG (Germany) was investigated, in particular its sales volume by regions of the world. It was established that the sale of high-tech products and services in the European region, including Germany, plays a significant role in the marketing activities of the concern. Novelty. The methodological approach of product competitiveness formation, aimed at compliance with marketing energy-saving values on the principles of using the fuzzy logic theory, consists in taking into account the components of competitiveness, mapping the functional directions of logistics, logistics service, forming density, continuity of logistics flows, energy saving, during comparison with logistic linguistic variables, which positively affects obtaining competitive advantages of high-tech enterprises. Practical value. It is proposed to achieve the economic effect of increasing the competitiveness of products of high-tech engineering enterprises based on the application of two supporting approaches: competitive and logistical.

Financial Constraints and Risk Aversion: A Tax-based Theory of Rising Industrial Concentration

I propose a theory that shows for financially constrained firms, a lower tax rate on cash returns can cause firms to hoard more cash and increase their investment in risky projects. As a result, industry sales becomes increasingly concentrated in top firms. The model has three central ingredients: (1) Risk-neutral firms behave as if they were risk-averse because of financial constraints (2) The tax rate of the return on cash is negatively related to firms' effective risk-aversion. (3) Investments in risky projects, after the resolution of uncertainty, become ex-post dispersion in firms' sales, which give rise to an increase in the level of market concentration. So when the foreign tax rate were lowered in the late 90s, the theory suggests that multinational firms' effective risk-aversion was reduced and they had the incentive to increase investments in risky projects. This, in turn, leads to an increasingly concentrated economy. Empirical evidence is consistent with the proposed risk-taking channel.

A Characterization of the Herfindahl Hirschman Index and its use in the Horizontal Merger Guidelines

This article characterizes the Herfindahl Hirshman Index and its use by the Department of Justice and the Federal Trade Commission of the United States, in their Horizontal Merger Guidelines. The characterization maps ranges of the index with the level of market concentration and its changes due to horizontal mergers and acquisitions, in terms of the number of firms operating in the market and the market share of the largest active firm. The article aims to provide alternative and graphic approaches that may contribute to analyze horizontal mergers and acquisitions in an easier and expedited way, from a market concentration perspective and before there are any changes in strategic interactions or market equilibria.

Breadth and Exclusivity of Hospital and Physician Networks in US Insurance Markets

Little is known about the breadth of health care networks or the degree to which different insurers' networks overlap. To quantify network breadth and exclusivity (ie, overlap) among primary care physician (PCP), cardiology, and general acute care hospital networks for employer-based (large group and small group), individually purchased (marketplace), Medicare Advantage (MA), and Medicaid managed care (MMC) plans. This cross-sectional study included 1192 networks from Vericred. The analytic unit was the network-zip code-clinician type-market, which captured attributes of networks from the perspective of a hypothetical patient seeking access to in-network clinicians or hospitals within a 60-minute drive. Enrollment in a private insurance plan. Percentage of in-network physicians and/or hospitals within a 60-minute drive from a hypothetical patient in a given zip code (breadth). Number of physicians and/or hospitals within each network that overlapped with other insurers' networks, expressed as a percentage of the total possible number of shared connections (exclusivity). Descriptive statistics (mean, quantiles) were produced overall and by network breadth category, as follows: extra-small (<10%), small (10%-25%), medium (25%-40%), large (40%-60%), and extra-large (>60%). Networks were analyzed by insurance type, state, and insurance, physician, and/or hospital market concentration level, as measured by the Hirschman-Herfindahl index. Across all US zip code-network observations, 415 549 of 511 143 large-group PCP networks (81%) were large or extra-large compared with 138 485 of 202 702 MA (68%), 191 918 of 318 082 small-group (60%), 60 425 of 149 841 marketplace (40%), and 21 781 of 66 370 MMC (40%) networks. Large-group employer networks had broader coverage than all other network plans (mean [SD] PCP breadth: large-group employer-based plans, 57.3% [20.1]; small-group employer-based plans, 45.7% [21.4]; marketplace, 36,4% [21.2]; MMC, 32.3% [19.3]; MA, 47.4% [18.3]). MMC networks were the least exclusive (a mean [SD] overlap of 61.3% [10.5] for PCPs, 66.5% [9.8] for cardiology, and 60.2% [12.3] for hospitals). Networks were narrowest (mean [SD] breadth 42.4% [16.9]) and most exclusive (mean [SD] overlap 47.7% [23.0]) in California and broadest (79.9% [16.6]) and least exclusive (71.1% [14.6]) in Nebraska. Rising levels of insurer and market concentration were associated with broader and less exclusive networks. Markets with concentrated primary care and insurance markets had the broadest (median [interquartile range {IQR}], 75.0% [60.0%-83.1%]) and least exclusive (median [IQR], 63.7% [52.4%-73.7%]) primary care networks among large-group commercial plans, while markets with least concentration had the narrowest (median [IQR], 54.6% [46.8%-67.6%]) and most exclusive (median [IQR], 49.4% [41.9%-56.9%]) networks. In this study, narrower health care networks had a relatively large degree of overlap with other networks in the same geographic area, while broader networks were associated with physician, hospital, and insurance market concentration. These results suggest that many patients could switch to a lower-cost, narrow network plan without losing in-network access to their PCP, although future research is needed to assess the implications for care quality and clinical integration across in-network health care professionals and facilities in narrow network plans.

Overview of public-private partnerships in the waste-to-energy incineration industry in China: Status, opportunities, and challenges

To accommodate the rapidly increasing amount of municipal solid waste (MSW) sustainably and effectively, public-private partnership (PPP) waste-to-energy (WTE) incineration has achieved rapid growth in China. This study provides an insight into current practice and identifies key opportunities and major challenges in the further development of PPP implemented in China's WTE incineration industry. The results show that the public-private-partnership market is currently under a period of rapid expansion, with a large number of well-funded and highly professional public-private partnership suppliers emerging in recent decades, but at a level of market concentration that is significantly lower than in mature markets such as in the United States and Japan. Meanwhile, excellent market potential and preferential policies, as well as booming technological innovations, provide sufficient motivation for further development. However, the quality and quantity of municipal solid waste supplied, emerging public opposition, policy changes and the development dilemmas involved are major challenges to the sustainable and healthy development of the waste-to-energy incineration industry in China. These findings make strong contributions and have both theoretical and practical implications for researchers and practitioners, including policymakers and incineration professionals in the PPP WTE incineration industry.

Collusion in Markets with Syndication

Many markets, including markets for IPOs and debt issuances, are syndicated: each winning bidder invites competitors to join its syndicate to complete production. Using repeated extensive form games, we show that collusion in syndicated markets may become easier as market concentration falls, and that market entry may facilitate collusion. In particular, firms can sustain collusion by refusing to syndicate with any firm that undercuts the collusive price (and thereby raising that firm’s production costs). Our results can thus rationalize the paradoxical empirical observations that the IPO underwriting market exhibits seemingly collusive pricing despite low levels of market concentration.

Collusion in Markets with Syndication

Many markets are syndicated, including those for initial public offerings, club deal leveraged buyouts, and debt issuances; in such markets, each winning bidder invites competitors to join a syndicate to complete production. We show that in syndicated markets, collusion may become easier as market concentration falls and market entry may facilitate collusion. In particular, firms can sustain collusion by refusing to syndicate with any firm that undercuts the collusive price, thereby raising that firm’s production costs. Our results can thus rationalize the paradoxical empirical observations that many real-world syndicated markets exhibit seemingly collusive pricing despite low levels of market concentration.

Pengaruh Sistem Kartel terhadap Stabilitas Persaingan Usaha di Indonesia

A cartel is an agreement made by a business actor with its competitors to gain excessive profits, which is stated in article 11 of Law No. 5 of 1999 concerning anti-monopoly and unfair business competition in Indonesia, the influence of cartels in business competition can cause unfair competition, damage market stability, and shut down competition in a particular market. The objectives presented in this study are to determine the forms of cartels that usually occur in limiting unfair business competition in Indonesia, and to determine the factors used by KPPU in identifying early indicators of cartel systems. This study uses a normative legal method with rationality which examines the influence of the cartel system on the stability of business competition in Indonesia, which appears to have experienced norm blur. The data source used in solving problems is the statutory approach. Literatures, journals and various related documents. The results of the discussion show that cartels have several types, namely regional cartels, production, prices, conditions, profit sharing, the influence of the cartel system in business competition which has a negative impact which causes unfair business competition, as well as harms various parties ranging from business actors, consumers, to the government. Then, in identifying the occurrence of cartels, there are several factors used by KPPU, namely structural factors consisting of the level of market concentration, number of companies, company size, homogeneity of goods or services, multi-market contacts, supply and production capacity, ownership linkages, ease of entry. specific market share, the character of demand. The next factor is the behavioral factor which is divided into two parts, starting from transparency and information exchange.

Are the effects of market concentration and income diversification on banking performance persistent?

We analyze the effects of market concentration and income diversification on banking performance. We used a sample of 134 countries for the period 1994-2011 and used the GMM estimator proposed by Arellano and Bover (1995). Our results show that market concentration and income diversification have a positive and non-linear effect on bank performance. The non-linearity suggests that the positive effect is reversed if the banking industry has high levels of market concentration and income diversification. During an economic crisis, the banking industry reduces diversification to support its performance. These results are relevant for the design of financial policy and banking strategies.

Are the effects of market concentration and income diversification on banking performance persistent?

We analyze the effects of market concentration and income diversification on banking performance. We used a sample of 134 countries for the period 1994-2011 and used the GMM estimator proposed by Arellano and Bover (1995). Our results show that market concentration and income diversification have a positive and non-linear effect on bank performance. The non-linearity suggests that the positive effect is reversed if the banking industry has high levels of market concentration and income diversification. During an economic crisis, the banking industry reduces diversification to support its performance. These results are relevant for the design of financial policy and banking strategies.

Struktur pasar pisang ”kepok”

Bananas are planted almost evenly throughout the territory of Indonesia, including in East Nusa Tenggara (NTT). One of the potential areas of NTT that produces a lot of Kepok bananas is Sikka Regency, especially Paga District. Market structure is one indicator to analysis the level of competition and marketing efficiency. This study aims to analyze the structure of the Kepok market in Paga District, Sikka Regency, involving 45 respondents of banana farmers and ten intermediate traders (between islands). Analysis of the banana market structure uses CR4, HHI, and GR to find the level of market concentration, the barrier to entry, market information, and product differentiation. The results found that in selling banana, banana farmers are at a low concentration level dealing with traders with high concentration levels. Judging from the entry barriers, undifferentiated market, and product information shows that the Kepok banana market is classified as an oligopsonistic imperfect market. In this condition, the farmer is only a price taker, while the price is determined by the trader (price maker). Consequently, the dependence of Kepok banana farmers on intermediary traders is very high, so the hopes of farmers to get a reasonable income have not been achieved. Farmers and trader’s marketing institutions need to regulate market mechanisms to be more efficient. There is a fair distribution among marketing institutions.

Improving state regulation of the insurance services market

An urgent task in the field of public administration of non-banking financial services markets is to improve the regulation of the insurance market. On the example of the insurance services market, the problems of the functioning of the financial market regulation system are highlighted. Suggestions for its improvement are presented to increase the competitiveness of these markets. The development of the Ukrainian insurance market after 2015 to the present has a positive trend, which indicates the effectiveness and managerial ability of the state regulation system. The indicators of the state of the insurance market of Ukraine in comparison with similar indicators of such markets in the countries of the European Union are considered. The dynamics of concentration of the insurance market of Ukraine over the past 15 years has been analyzed. The main trends in the development of competition in this financial sphere have been identified. The necessity of state regulation of the concentration of the insurance market is substantiated. Views on the methodology and tools used in the study of the concentration and competitiveness of the insurance market are presented. Suggestions for improving the methods are given. It is shown that from 2012 to 2019 the Herfindahl - Hirschman index for risky types of insurance and for the insurance market as a whole has been increasing. It is established that according to the gradation of financial market concentration levels using the Herfindahl - Hirschman index, the insurance market of Ukraine corresponds to the degree of low concentration. According to the value of the Herfindahl - Hirschman indicator, the concentration of the life insurance market during 2003 – 2019, with the exception of 2015, is moderate. But the total share of gross insurance premiums collected by the three largest insurance companies in 2017 – 2019 exceeded 50 % of all gross insurance premiums. According to the Ukrainian law, such a market is considered a monopoly. It is shown that when analyzing the state and development of the insurance market of Ukraine, it is advisable to supplement the values of the Herfindahl - Hirschman index with corrective coefficients that take into account regional characteristics of the market, types of insurance, additional indicators of its functioning efficiency. Measures are proposed to accelerate the development of the insurance market of Ukraine by improving its regulation system.

THE EFFECT OF FOREIGN DIRECT INVESTMENT SPILLOVER ON THE LEVEL OF TECHNICAL EFFICIENCY IN LARGE AND MEDIUM MANUFACTURING INDUSTRY IN EAST JAVA

Foreign Direct Investment (FDI) takes an important role in the development process, especially in developing countries. The purpose of this study is to examine and analyze FDI spillover on the level of technical efficiency in the large and medium manufacturing industry in East Java. This study uses a time-varying stochastic frontier approach for firm-level panel data of the East Java manufacturing industry. The results show that all factors in this study affect the level of technical efficiency of large and medium industries in East Java. Variable foreign share, FDI horizontal spillover, and firm size have a positive influence on the technical efficiency of the industry. Whereas the variable FDI backward spillover, FDI forward spillover and the level of market concentration negatively affect the level of technical efficiency of the industry. Finally, it’s needed to build synergies and sustainable relationships between products produced by domestic and foreign firms. Thus, the presence of foreign firms in East Java could have a positive impact on improving the technical efficiency of the domestic industry both at the upstream and downstream levels. Keywords: Foreign Direct Investment Spillover, Technical Efficiency, East Java IndustryJEL Classification: F21, L60, D24

CONCENTRATION OF BANKING ACTIVITY IN UKRAINE

Introduction. As a result of the development of the economy, the desire of banks to get even more profit and interest people to use their Bank's services has also increased. This trend leads to an increase in the level of market concentration of banking activities. The purpose of the article is to analyze the current level of concentration of banking activity in Ukraine and create recommendations for its minimization. Results. The concentration of banking activity in Ukraine and its impact on the development of the economy are studied. The interpretation of the concepts "concentrate" and "concentration of banking activity" is defined. The dynamics of the number of commercial banks in Ukraine by city of their registration is studied. We analyzed the total financial result for the period under study, which retains negative values, because the number of banks continues to decline, and the pace of this process is measured on average by one Bank per month. The most active centers of banking activity in Ukraine are highlighted. A detailed analysis of banking activity is shown with the calculation of the Herfindahl-Hirschman index, which in turn allowed us to determine the level of concentration of banking activity in Ukraine. Conclusions. It is determined that an excessively high share of the state in the banking system's own capital may have a negative result, because such growth in the crisis near to excessive capitalization may lead to disorganization in the management of all state-owned banks over the next years. It was determined that instead of dozens of closed banking institutions a new generation of Ukrainian banks will come, which actively implement a policy of innovation and will position themselves as credible institutions with foreign investments and stabilization of the national currency and the slowdown in inflation will be factors that will help to realize the realities of the current economy. In addition, it was found that the confidence among the population about the activities of the banking sector in Ukraine still leaves much to be desired. Based on the research, the results analysis of the assessment of the financial stability index was carried out and a number of recommendations were proposed to reduce the effect of concentration of banking activities. Keywords: concentration, banking system, Herfindahl-Hirschman index, banking sector.

The Construction Market Monopolization: Identification of the Threats to the Economic Security of Ukraine

The degree of the construction market monopolization of Ukraine is assesed. Threats to the economic security of the state are identified, considering that monopolization causes significant public losses related to the establishment of monopoly prices, the slowdown in scientific and technological progress, the irrational allocation of resources. According to data on the net income of enterprises in the construction industry of Ukraine, the authors calculated Market concentration ratio, Herfindahl-Hirschman index, Dispersion of market shares, Coefficient of variation, Gini index, Entropy of market shares, that indicate a low level of the construction industry monopolization in Ukraine. Defined indicators allowed to form a matrix, which characterize the level of market concentration and its dynamics. According to the values of the variation index and the Gini index, the market studied belongs to highly monopolized, and due to the tendency of the Gini index to increase, it falls into the “red zone”. This means the emergence of threats to national economic security associated with a decrease in GDP, increased income differentiation, reduced state budget revenues, and the like and indicates the need for macroeconomic measures that would restrain the development of monopoly phenomena in the construction market. This approach to identifying economic security threats resulting from market monopolization will allow the state to respond to negative trends in a timely manner, counteracting the threatening factors.

Pengaruh Tingkat Hutang, Fee Audit, dan Konsentrasi Pasar Pada Persistensi Laba

This study aims to determine whether the level of debt, audit fees, and market concentration affect earnings persistence. This research was conducted on transportation companies listed on the Indonesian stock exchange from 2014 to 2017. The number of samples taken as many as 9 companies using non-probability sampling method with purposive sampling technique. The analysis technique used is multiple linear regression. Based on the results of the analysis found that the level of debt, audit fees, and market concentration has a positive effect on earnings persistence.Keywords: Debt Levels; Audit Fees; Market Concentration; Earnings Persistence.

Does Banking in Indonesia tend to be Concentrated?

The banking in Indonesia has undergone several changes in the market structure that ultimately impacts the prevailing policies and regulations. This study aims to examine the impact of changes in the banking market structure identified through the level of market concentration in the banking environment and examine the factors that influence the level of concentration of the banking market from 2005 to 2016. The study also examined the impact of changes in banking structure during the global crisis. The measurement of banking concentration used in this study is the Herfindahl-Hirschman Index (HHI). Furthermore, the influential factors consist of: (1) Bank specification, including bank size (Size), credit risk (NPL), profitability (ROE), banksoundness(CAR),(2)Market specification,namely the number of standingbank (NUM), and (3) Global crisis. The study used GLS (Generalized Least Square) method to detect autocorrelation on each variable.The results show that banks in Indonesia tended to have a low level of market concentration. The results are also in accordance with the SCP paradigm which states that banks tend to generate high profits when the level of banking market concentration is high.Keywords : Market Concentration, Competition, Dual-Banking, Bank Specification, Market Specification, Global Crisis.