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

Labaj, Martin and Morvay, Karol and Silanic, Peter and Weiss, Christoph and Yontcheva, Biliana (2018) Market structure and competition in transition: results from a spatial analysis. Applied Economics, 50 (15). pp. 1694-1715. ISSN 0003-6846

Available under License Creative Commons: Attribution 4.0 International (CC BY 4.0).

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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.

Item Type: Article
Additional Information: This article is part of the research project "OP Vzdelávanie (OP Education): Increasing the quality of doctoral studies and support of the international Research" at the FNE, University of Economics in Bratislava (ITMS 26140230005). This work was supported by the Austrian National Bank (OeNB) Anniversary Fund [16016] and European Union OP Education [26140230005].
Keywords: Entry thresholds, competition, Slovakia, transition, geographic markets
Classification Codes: JEL L22, D22, M13, R11
Divisions: Departments > Volkswirtschaft > Volkswirtschaftspolitik u Industrieökon.
Version of the Document: Published
Depositing User: Gertraud Novotny
Date Deposited: 06 Oct 2017 10:40
Last Modified: 02 Jul 2018 17:37
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