Measuring market power in the Greek manufacturing industry with emphasis in the food industry

• Κύριος συγγραφέας: Καλαντζή, Μαρία
• Άλλοι συγγραφείς: Ρεζίτης, Αντώνιος
• Μορφή: Thesis
• Γλώσσα: English
• Έκδοση: 2015
• Θέματα: Market power; Greek manufacturing industry; Bootstrap; Welfare losses; 338.43; Μονοπωλιακή δύναμη; Ελληνική μεταποιητική βιομηχανία; Μέθοδος Bootstrap; Απώλειες ευημερίας

The social welfare of an economy is maximized when the various economic industries operate under conditions of perfect competition. According to the industrial organization, any deviation from perfect competition leads to several losses for the economy and more generally for the society. The investigation of the degree of market power, which comprises the basic objective of the present dissertation, is vital for the proper functioning of the economy. Therefore, the present study tests for the degree of market power and the market power determinants in the twenty-one sectors of the Greek manufacturing industry over the period 1983-2007. The degree of market power is also assessed in the nine sectors of the Greek food and beverages manufacturing industry for the period 1983-2007. Moreover, this study investigates the markup and the markup determinants for the twenty-one sectors of the Greek manufacturing industry as well as for the nine sectors of the Greek food and beverages manufacturing industry over the period 1984-2007. Furthermore, the present study estimates the welfare losses in the event of the existence of oligopoly power. In addition, the technical efficiency and its determinants are investigated for the twenty-one sectors of the Greek manufacturing industry as well as for the nine sectors of the Greek food and beverages manufacturing industry during the period 1984-2007. Three different approaches based on the “new empirical industrial organization” (NEIO) were used with the view to measuring the degree of market power and evaluating the competitive conditions. The first approach is the conjectural variation approach, which provides estimates regarding the actual degree of market power. The second approach is the Hall-Roeger approach and it investigates the market structure and more specifically the markup. The third approach developed comprises an extension of the Hal-Roeger approach and offers contemporaneous estimates about the degree of market power and the markup. Moreover, the welfare losses were estimated using a formal model of oligopoly. The technical efficiency was measured following the “data envelopment analysis” (DEA), while its sources were determined based on the Simar and Wilson’s Algorithm 1. A very important issue in the present study is the application of the bootstrap technique to the empirical estimations. That is why the application of the bootstrapping can lead to an accurate estimation of the sampling distribution without any assumptions on the distribution of the population from which the sample was taken so that the results of the empirical estimates can be accurate, robust and reliable. The empirical results indicate the presence of some degree of market power and markup in all sectors of the Greek manufacturing industry as well as those of the Greek food and beverages manufacturing industry over the period 1983-2007. In other words, the findings imply that both the manufacturing industry as well as the food and beverages industry operated under conditions of imperfect competition implying the existence of welfare losses. Furthermore, the results indicate that in the case of the Greek manufacturing industry, among the factors determining the market power and the markup at the sectoral level are the number of firms, the labor intensity and the sector size, while the determinants of market power and markup, over time, are the number of firms, the labor intensity and the growth. In the case of the Greek food and beverages manufacturing industry, the results suggest that among the determinants of the markup are the number of firms, the capital intensity and the sector size. More specifically, the empirical results imply that the degree of market power and the markup are negatively related to the variables of the number of firms and the labor intensity. In other words, the higher the number of firms, the lower the degree of market power and markup. Also, the sectors which are more labor-intensive have a lower degree of market power and markup. Additionally, the findings support that the degree of market power and the markup are related positively to the variables of the sector size, the growth and the capital intensity. In particular, the bigger the size of a sector the higher the degree of market power and markup. Also, the growth leads to a higher level of market power and markup. Furthermore, the sectors which are more capital-intensive have a higher markup. Moreover, the empirical results indicate that, on average, all sectors of the Greek manufacture as well as those of the food and beverages industry are technically inefficient over the period 1984-2007. Note that, in the case of the Greek manufacturing industry, the technical efficiency tends to increase over the period 1984-2007, whereas in the case of the Greek food and beverages manufacturing industry, the technical efficiency tends to decrease over the same period, i.e. 1984-2007. Also, the findings of the present dissertation imply that among the factors affecting technical efficiency for both the Greek manufacture and the food and beverages industry are the sector size, the growth, the capital and labor productivity and the labor intensity. More specifically, the empirical results indicate that the variables of sector size, growth, capital and labor productivity and labor intensity can positively influence the level of technical efficiency. In other words, the bigger the sector the higher the level of technical efficiency. Also, the growth improves the technical efficiency of a sector. Moreover, an increase in the capital productivity or/and in the labor productivity can lead to a higher level of technical efficiency. In addition to that, an increase of the labor intensity can result in the technical efficiency increase.