Simultaneous Equation of Concentration, Efficiency, and Competitiveness of Indonesia's CPO Industry: Impacts and Policies

Ariodillah Hidayat, Bernadette Robiani, Taufiq Marwa, Didik Susetyo and Imam Asngari

Economia agro-alimentare, 2025, vol. 2025/1, issue 1, 39-80

Abstract: This study simultaneously analyzed the industrial concentration measured using CR4, technical efficiency measured using Stochastic Frontier Analysis (SFA), and competitiveness using the Revealed Comparative Advantage (RCA) approach of the CPO industry in Indonesia. The study uses time series data from 2001 to 2020, sourced from the Central Statistics Agency (BPS), the World Bank, and UN Comtrade. This study uses a simultaneous model approach of Two Stage Least Squares (2SLS). The results show that the efficiency of the technique has a negative and significant impact on industrial concentration.The market concentration measured by CR4 shows a positive and significant relationship with competitiveness. Large companies that dominate the market are able to create price stability and encourage innovation, which ultimately improves the profitability and quality of CPO. RSPO policy is negatively correlated with concentration levels, the high cost of certification can be a barrier for new companies to enter the market. Biodiesel policy opens up new opportunities, the push to meet domestic demand can reduce the pressure to innovate.

Date: 2025
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