Pustaka Ilmiah Universitas Padjadjaran

Abstrak

The effect of Industrial Concentration on The Oligopolistic Conduct in The Food and Beverages Sector*

Indonesian food and beverages industry is characterized by oligopoly structure indicating that there is only a few firms dominating the markets. Structure-conduct-performance (SCP) paradigm suggests that few firms in oligopolistic structure tend to collude to set the price and/or quantity. Another competing theory, contestable market theory, suggests that few firms in oligopolistic market may still have a competition regadless the number of the firms as long as there is no barrier to entry. To see which paradigm/theory applies in the Indonesian food and beverages industry, this research investigates the effect of industrial concentration on the firm conduct in the industry. Regarding the limitation of measuring conduct parameter in SCP paradigm or contestable market hypothesis, this research applies the New Empirical Industrial Organization (NEIO) approach in measuring the firm conduct. With respect to the model, this research uses only 5 sectors of the the food and beverages industry for which the sub sectors have the relatively homogenous product as well as have sufficients observations. This research uses the manufacturing survey data of the Bureau of Central Statistics (BPS) for the period from 2001-2006. This reseach found that the higher industrial concentration, the less competitive the conduct of the firms in the industry, on average. The effect of the Industrial concentration on the conduct parameters varies between sub sectors in the industry. This research suggests the policy maker to foster a competitive environment in the Indonesian food and beverages industry.