Market structure and competition in transition: results from a spatial analysis

Martin Lábaj, Karol Morvay, Peter Silanič, Christoph Weiss and Biliana Yontcheva

Applied Economics, 2018, vol. 50, issue 15, 1694-1715

Abstract: The present article provides first microlevel (indirect) empirical evidence on changes in entry barriers, the determinants of firm profitability as well as the nature of competition for a transition economy. We estimate size thresholds required to support different numbers of firms for several retail and professional service industries in a large number of geographic markets in Slovakia. The 3 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 that the intensity of competition has increased on average. 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 neighbouring cities and villages. The importance of these spatial spill-over effects differs across industries.

Date: 2018
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Citations: View citations in EconPapers (6)

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Related works:
Working Paper: Market Structure and Competition in Transition:Results from a Spatial Analysis (2016)
Working Paper: Market Structure and Competition in Transition: Results from a Spatial Analysis (2016)
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DOI: 10.1080/00036846.2017.1374535

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