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Market Structure and Competition in Transition:Results from a Spatial Analysis

Martin Lábaj, Karol Morvay (), Peter Silanic (), Christoph Weiss and Biliana Yontcheva ()
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Karol Morvay: Department of Economic Policy, University of Economics in Bratislava
Peter Silanic: Department of Economic Policy, University of Economics in Bratislava
Biliana Yontcheva: Department of Economics, Vienna University of Economics and Business

Department of Economics Working Papers from Vienna University of Economics and Business, Department of Economics

Abstract: The present paper provides first microlevel (indirect) empirical evidence on changes in the determinants of firm profitability, the role of fixed and sunk costs, as well as the nature of competition for a transition economy. We estimate size thresholds required to support different numbers of firms for four retail and professional service industries in a large number of geographic markets in Slovakia. The three 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 the intensity of competition has increased. 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 neighboring cities and villages. The importance of these spatial spill-over effects differs across industries.

Keywords: entry thresholds; competition; Slovakia; transition; geographic markets (search for similar items in EconPapers)
JEL-codes: D22 L22 M13 R11 (search for similar items in EconPapers)
Date: 2016-02
New Economics Papers: this item is included in nep-bec, nep-com, nep-eur, nep-ind, nep-tra and nep-ure
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Related works:
Journal Article: Market structure and competition in transition: results from a spatial analysis (2018) Downloads
Working Paper: Market Structure and Competition in Transition: Results from a Spatial Analysis (2016) Downloads
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