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

Martin Lábaj, Karol Morvay, Peter Silanic, Christoph Weiss, Biliana Yontcheva

Publication: Scientific journalJournal articlepeer-review

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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.
Original languageEnglish
Pages (from-to)1694 - 1715
JournalApplied Economics
Issue number15
Publication statusPublished - 2018

Austrian Classification of Fields of Science and Technology (ÖFOS)

  • 502025 Econometrics
  • 507023 Location development
  • 502013 Industrial economics

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