COMPETITION POLICY AND THE IMPACT OF MARKET STRUCTURE ON COMPANIES’ PROFITABILITY

Boban Stojanović and Milan Kostić
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Boban Stojanović: University of Niš, Faculty of Economics
Milan Kostić: University of Kragujevac, Faculty of Economics

Serbian Association of Economists Journal, 2013, issue 5-6, 325-338

Abstract: Competition policy has a role to ensure equal conditions for all market participants. This policy enables the realization of effective competition, which is a prerequisite for economic and broader social progress. To make competition policy be of a good quality it must be based on the findings of economic science, in particular the one concerning industrial organizations and relationships among market structure, conduct and performance of companies (SCP). The analysis of these relationships is the way for identifying market imperfections and the consequences that these imperfections have on society as a whole. The paper promotes economic analysis in the field of competition through empirical evaluation of industrial organization findings. Empirical research has shown a statistically significant positive impact of the change in market share on the change of the profit margin of companies operating in the Serbian beer market. Given that this market is highly concentrated, any increase in market share increases profit margin, and vice versa. Empirical research conducted in the paper is a sound basis for the professional and economics-founded application of modern competition policy measures aimed at preventing and punishing anti-competitive behaviour.

Keywords: competition policy; market structure; market share; non-competitive behaviour; profit rate (search for similar items in EconPapers)
JEL-codes: E00 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (2)

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