Survey of the Industrial Concentration and Price-cost Margin of the Indonesian Manufacturing Industry

Setiawan, Maman; Effendi, Nury

doi:10.1080/10168737.2015.1136666

Cited by 15 publications

(26 citation statements)

References 21 publications

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“…The relatively large average of CR4 (0.4311) suggest that some sub-sectors may have market structures that display high market power from a few players. Previous studies have identified several sub-sectors in the Indonesian manufacturing industry following a tight oligopoly structure ( Setiawan and Effendi, 2016 ). This is in line with the criteria for market structure proposed in Shepherd and Shepherd (2003) .…”

Section: Methodsmentioning

confidence: 99%

“…Some studies find evidence of higher levels of concentration leading to technical inefficiency, supporting the QLH hypothesis ( Al-Muharrami and Matthews, 2009 ; Sari et al., 2016 ; Sari, 2019 ; Setiawan et al., 2012 ; Setiawan and Lansink, 2018 ; Swaminathan et al., 2015 ). In the context of Indonesia, Setiawan and Effendi (2016) argue that high market concentration in manufacturing firms may lead to market power rather than higher efficiency.…”

Section: The Effect Of Competition and Foreign Presencementioning

confidence: 99%

“…First, the paper considers the effect of domestic and foreign competition (FDI, Export, and import) on firm-level technical efficiency. Second, the study looks at the links between firm efficiency and competition by estimating two complementary indicators of competition (HHI and CR4), building on the insights of Setiawan and Effendi (2016) related to industrial concentration in Indonesia. Third, the model employs interaction terms that help capture the effect of competition within horizontal spillovers and computes the effects of international openness (exports and imports) on total efficiency.…”

Section: The Effect Of Competition and Foreign Presencementioning

confidence: 99%

“…A possible explanation for the mixed results in the relation between efficiency and industrial concentration in Indonesia is that although previous studies often include the HHI as a proxy for overall industrial concentration, the market share held by the largest players (CR4) is seldom considered as noted in Setiawan and Effendi (2016) and Setiawan and Lansink (2018) . While there would be many firms within a market, there are sectors in which few players held a substantial share of the market, and many firms held the rest.…”

Section: Introductionmentioning

confidence: 99%

See 3 more Smart Citations

Does competition and foreign investment spur industrial efficiency?: firm-level evidence from Indonesia

Esquivias

Harianto

2020

Heliyon

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This study examines the effects of market competition and foreign direct investment on the technical efficiency of firms within the Indonesian manufacturing sector using a Stochastic Frontier Analysis. We employ a firm-level panel dataset for the period of 2010–2014, covering 400 subsectors, and employing two measures of industrial concentration as proxies for market competition. The results suggest that firms operating in less competitive sectors in Indonesia experience higher technical efficiency. Additionally, foreign ownership, international activity (export-import), and firm size are positively related to technical efficiency. Such findings suggest that the efficient structure hypothesis (ESH) applies in Indonesia, as more efficient firms gain in market share as a result from dynamic competition. Foreign direct investment (FDI) via horizontal spillovers has contributed to an increase in intra industry firms’ efficiency. Nevertheless, as industrial concentration increases, the positive effects in firm efficiency from FDI and from international trade (imports and export) tend to decrease.

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Section: Methodsmentioning

confidence: 99%

Section: The Effect Of Competition and Foreign Presencementioning

confidence: 99%

Section: The Effect Of Competition and Foreign Presencementioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

See 2 more Smart Citations

Does competition and foreign investment spur industrial efficiency?: firm-level evidence from Indonesia

Esquivias

Harianto

2020

Heliyon

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“…The Indonesian ministry of industry also had already made a roadmap to develop the manufacturing industry into industry 4.0 which may need more investment in R&D. Despite the importance of the industry, the industry has a high industrial concentration [2]. Setiawan & Effendi [2], Setiawan et al [3][4][5][6], Setiawan [7,8] and Setiawan and Sule [9] found that the high industrial concentration causes welfare losses, increasing inefficiency in the industry. Moreover, Setiawan & Oude Lansink [6] found that there was a dynamic technical regress in the Indonesian food industry which had high industrial concentration.…”

Section: Introductionmentioning

confidence: 99%

R&D and Industrial Concentration in the Indonesian Manufacturing Industry

Setiawan

Indiastuti

Hidayat

et al. 2021

Journal of Open Innovation: Technology, Market, and Complexity

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This research investigates the relation between research and development (R&D) expenditure and the industrial concentration in the Indonesian manufacturing industry. Pooled least square dummy variable is applied to estimate the relation between the two variables. This research uses firm-level data taken from the survey of the manufacturing industry sourced from the Indonesian Bureau of Central Statistics. This research makes contributions in calculating the percentage of R&D expenditure using the recent data and freshly estimating the relation between R&D and industrial concentration in the industry. This research finds that the percentage of R&D expenditure is relatively low in the industry. There is also a declining trend in the percentage of the R&D expenditure from the period 1994–1995 to 2017. The higher industrial concentration increases the percentage of R&D expenditure. This research also finds that R&D expenditure can be higher in the firms with market power.

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Dynamics of industrial concentration and technical inefficiency in the Indonesian food and beverage industry

Setiawan

Emvalomatis

2022

Agribusiness

Self Cite

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The food and beverage industry contributed significantly to the Indonesian economy, accounting for about 7% of gross domestic product yearly since 2000 (Indonesian Central Bureau of Statistics [BPS], 2016). Nevertheless, previous research has shown that the Indonesian food and beverage industry is highly concentrated and has the potential to create distortions in the Indonesian economy (see Setiawan & Effendi, 2016). Setiawan and Oude Lansink (2018) also found that the technical inefficiency in the industry was attributed, among other reasons, to high industrial concentration. 1 Previous research has investigated the relationship between industrial concentration and technical inefficiency in the Indonesian food and beverage industry using the frameworks of the quiet-life and efficient-structure hypotheses (see Setiawan & Oude Lansink, 2018;Setiawan et al., 2012). 2 The research found a unidirectional relationship: only industrial concentration affected technical inefficiency (quiet-life hypothesis). The quiet-life hypothesis suggests that firms operating in highly concentrated industries tend to be inefficient because of a lack of pressure from competitors. Past studies have used a comparative static approach, assuming that the

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Survey of the Industrial Concentration and Price-cost Margin of the Indonesian Manufacturing Industry

Cited by 15 publications

References 21 publications

Does competition and foreign investment spur industrial efficiency?: firm-level evidence from Indonesia

Does competition and foreign investment spur industrial efficiency?: firm-level evidence from Indonesia

R&D and Industrial Concentration in the Indonesian Manufacturing Industry

Dynamics of industrial concentration and technical inefficiency in the Indonesian food and beverage industry

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