Industrial concentration and price-cost margin of the Indonesian food and beverages sector

Maman Setiawan (), Grigorios Emvalomatis and Alfons Oude Lansink ()

Applied Economics, 2012, vol. 44, issue 29, 3805-3814

Abstract: This article investigates trends in industrial concentration and its relationship with the price-cost margin in 54 subsectors of the Indonesian food and beverages sector in the period 1995 to 2006. This study uses firm-level survey data provided by the Indonesian Bureau of Central Statistics (BPS), classified at the five-digit International Standard Industrial Classification (ISIC) Level. The results show a significant increase in industrial concentration in 1995 to 1999, which coincided with the period of the economic crisis in Indonesia. After 1999, the industrial concentration exhibits a slightly decreasing long-term trend. Furthermore, the industrial concentration for all subsectors tends to converge to the same value in the long run. Additionally, results show that higher industrial concentration yields a higher price-cost margin. Finally, the introduction of the competition law in 1999 has slightly lowered industrial concentration and the price-cost margin.

Date: 2012
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DOI: 10.1080/00036846.2011.581220

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