Abstract
This paper reports an analysis of the determinants of the level and changes in Polish industrial concentration in the early post-transition era. In particular, the relative effects of foreign and state ownership are examined. The empirical evidence is based on a panel of 144 Polish manufacturing industries over the period 1989–1993. The results suggest that both state and foreign ownership have a significant impact on industry concentration and this relationship is U-shaped. Minimum efficient scale is found to be the only other factor to impact on industry concentration.
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Notes
Sutton (1991) argues that research and development (R&D) and advertising expenditures are endogenous sunk costs that serve as strategic barriers to entry, which consequently lead to higher concentration. Sutton suggests using R&D and advertising intensity to distinguish between industries when estimating concentration models rather than estimating a model for all industries. Unfortunately, R&D and advertising data are unavailable and so we do not adopt the approach suggested by Sutton.
According to the Polish classification system used by 1993, the manufacturing sector is divided into 24 two-digit branches, and further into 170 three-digit industries. The codes used are slightly different from the published SIC codes but for the majority of industries it is possible to find a match on the basis of the description of the product of a given industry.
These industries are not named because GUS regards the information as commercially sensitive.
The price index available is at a level more aggregated than the 3-digit classification we used throughout.
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Data Appendix
Data Appendix
1.1 Definition of variables
HI—the Hirschman–Herfindahl concentration index (equal to the sum of squared market shares of all the firms in the industry), where the share of each firm is expressed in terms of sales.
MES—minimum efficient scale is the average size of enterprise contained in the upper 50th percentile of industry sales. It is expressed as a proportion by dividing through by industry sales.
SIZE—market size measured by industry sales (in millions of Polish zloty) and deflated by the 1988 price index.Footnote 5
INTANG—the ratio of intangible assets (such as patents, goodwill, brand name) to total assets.
PCM—price-cost margin is defined as (sales-cost)/sales, where cost includes all costs such as intermediate inputs and energy, not just wage bill.
CAPR—The industry entry capital requirements calculated as MES multiplied by the capital stock-sales ratio.
STATE_NUM—the ratio of state-owned firms to the total number of firms in a given industry.
STATE_SHARE—the ratio of output produced by state-owned firms to total industry output.
FOREIGN_NUM—the ratio of foreign-owned firms to the total number of firms in a given industry.
FOREIGN_SHARE—the ratio of output produced by foreign-owned firms to total industry output.
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Amess, K., Roberts, B.M. The impact of foreign and state ownership on post-transition industrial concentration: the case of Polish manufacturing. Econ Change 38, 211–225 (2005). https://doi.org/10.1007/s10644-006-9003-z
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DOI: https://doi.org/10.1007/s10644-006-9003-z