Empirical Economics

, Volume 45, Issue 3, pp 1149–1165

Structure, conduct, and performance: evidence from the Indonesian food and beverages industry

Authors

    • Business EconomicsWageningen University
    • Faculty of Economic and BusinessUniversity of Padjadjaran
  • Grigorios Emvalomatis
    • Business EconomicsWageningen University
  • Alfons Oude Lansink
    • Business EconomicsWageningen University
Article

DOI: 10.1007/s00181-012-0648-3

Cite this article as:
Setiawan, M., Emvalomatis, G. & Oude Lansink, A. Empir Econ (2013) 45: 1149. doi:10.1007/s00181-012-0648-3

Abstract

This article employs the Structure–Conduct–Performance (SCP) paradigm to investigate the simultaneous relationship between industrial concentration, price rigidity, technical efficiency, and price-cost margin in the Indonesian food and beverages industry. This research extends the SCP framework by including price rigidity and technical efficiency as additional key variables. The results suggest that there is a simultaneous relationship between industrial concentration, price rigidity, technical efficiency, and price-cost margin with a positive bi-directional relationship between industrial concentration and price-cost margin. These findings imply that an appropriate course of action for the regulator in this highly concentrated industry is to reduce industrial concentration in order to increase competition, reduce upward price flexibility, and increase technical efficiency in the long run.

Keywords

Structure–Conduct–Performance Food and beverages industry Panel data and simultaneous equations model Technical efficiency

JEL Classification

L10 L11 L13 C33 C36

Copyright information

© Springer-Verlag Berlin Heidelberg 2012