Relation Between Criteria for Evaluation of Market Competition

Abstract

Purpose. Understanding the level of competition in markets is critical for managers in their decision-making process. The numerous methods available for assessing competition can complicate this process. This article aims to summarize the existing methods for evaluating competition and identify the relationships between their evaluation criteria. Design/methodology/approach. This paper reviews and synthesizes techniques for assessing market competition that have been developed by researchers over the past several decades. The study employs a range of research methods, including analysis, synthesis, generalization, analogy, comparison, systematization, and graphical methods, to determine the relationships between different assessment criteria. This approach ensures a thorough examination of the methods and provides a robust framework for understanding their applicability. Findings. The study identifies and reviews prominent methods for assessing market competition, analyzing market structure, and calculating the market power of enterprises. These methods, proposed by scholars since the inception of this field, reveal that existing techniques can be categorized into distinct groups based on their evaluation criteria. The analysis highlights that despite the apparent simplicity of some formulas, calculating indicators related to market power remains challenging due to difficulties in obtaining accurate and objective data on profitability and, particularly, on the costs incurred by competitors. The most accessible and frequently used indicators are those derived from market structure analysis and concentration assessments. These methods are prevalent in practical applications, especially in anti-monopoly legislation, due to their effectiveness in assessing competitive dynamics and market power. Practical implications. Understanding the factors that determine market competition and shape an enterprise's market power will enable management to make quick and effective decisions regarding new products and markets. The presented correlation of various competition assessmentmethods and their structuring will assist in selecting the appropriate assessment method and avoid unproductive expenditure of time and resources on additional research. Originality/value. The structures and groupings of competition assessment methods provided in this paper offer a new, more comprehensive perspective on market concentration and market power. This perspective not only enhances the understanding of these concepts but also reflects their impact on enterprise profitability. The findings contribute to the ongoing development and refinement of both existing and novel methods for assessing market competition, thereby advancing the field.