The Effects of Concentration on Competition and Efficiency: Some Evidence from the French Audit Market

Géraldine BROYE () and Laurent Weill ()

Working Papers of LaRGE (Laboratoire de Recherche en Gestion et Economie) from Laboratoire de Recherche en Gestion et Economie, Université de Strasbourg (France)

Abstract: This paper aims at investigating the effects of concentration on competition and cost efficiency of the French audit market. Competition is measured with the Rosse-Panzar model, while cost efficiency is estimated with stochastic frontier approach. Cost efficiency levels are estimated at around 75% with greater efficiency for Big-Four firms, while the nature of competition appears to be monopolistic competition. Dynamic analysis shows a reduction in competition, and a decrease in cost efficiency for Big-Four and non-Big-Four firms between 1999 and 2003. We therefore provide support to a negative impact of concentration on competition and cost efficiency.

Keywords: Auditing; audit market; competition; efficiency. (search for similar items in EconPapers)
JEL-codes: L1 M4 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-acc, nep-com, nep-eff and nep-mic
Date: 2008
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Persistent link: http://EconPapers.repec.org/RePEc:lar:wpaper:2008-04

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