The relationship between technical efficiency and industrial concentration: Evidence from the Indonesian food and beverages industry

Agglomeration Economies and Productivity Growth in Manufacturing Industry: Empirical Evidence from Indonesia

“…This result further supports Porter's arguments about the positive effect of competition on firm performance and is in line with the findings of Setiawan et al . (). They find a negative relation between industrial concentration and the efficiency level in Indonesian food and beverage industries at the five‐digit ISIC level for the period from 1995 to 2006.…”

Price Rigidity and Industrial Concentration: Evidence from the Indonesian Food and Beverages Industry

“…To establish the relationship between the speed of price adjustment and industrial concentration, this research uses the equilibrium price suggested by the Cournot model of pricing . The Cournot model fits with the conditions of the Indonesian food and beverages industry, because this industry is characterized by an oligopoly structure and imperfect information (see Setiawan et al ., ,b). In addition, the large market in the Indonesian economy induces firms to compete in the quantity products to control the price following the Cournot oligopoly model.…”

“…Equation is estimated using a panel data model taking into account unobserved heterogeneity among subsectors. Generalised method of moments ( GMM ) is employed that uses as instrumental variables the natural logarithm of value added ( Size ), the growth of value added ( Growth ), the capital–output ratio ( COR ), the minimum efficient scale ( MES ), a dummy for competition law introduction ( Dlaw ), a dummy for cost increase ( DCUP ), and all dummies reflecting the subsectors (see Setiawan et al ., ,b) . The instrumental variables are used to correct for simultaneity bias due to the interaction between price and industrial concentration.…”

“…The Indonesian food and beverages industry is characterized by a high price–cost margin and technical inefficiency, and a high industrial concentration, with some sectors consisting of only a few large firms (see Setiawan et al ., ,b). A priori it is expected that firms in this highly concentrated food and beverages industry can use their market power to maintain the high price–cost margin and that they can create upward price flexibility when costs increase, but downward price rigidity when costs decrease (see Adji, ; Solikin and Sugema, ; Hutabarat, ; Central Bank of Indonesia, ).…”

An empirical study on measuring technical performance of industry based on ISIC classification

“…They reported that the average technical efficiency had declined in the mid-1980s but increased since 1992 and Eastern and Southern regions showed a higher than national average level of technical efficiency. Setiawan et al (2012) studied the relationship between technical efficiency and industrial concentration in the Indonesian food and beverages sector. They obtained firm-level information from the Indonesian Bureau of Central Statistics (BPS) to estimate technical efficiency scores and calculate measures of industrial concentration.…”