Evolution of competition in Vietnam industries over the recent economic transition

Doan, Tinh (2011): Evolution of competition in Vietnam industries over the recent economic transition.

Abstract

Understanding the degree and evolution of competition across industries is an important step towards understanding the impact of economic reform and competition on economic growth in Vietnam during the economic transition. In this paper, we investigate evolution of competition in Vietnam during the economic transition using the Price-Cost Margin (PCM) or Mark-up that has been widely applied in the economic literature and the Profit Elasticity (PE) recently developed by Boone (2000). This paper provides the first empirical study of intensity and evolution of competition across selected industries in Vietnam in the last decade using firm-level data from the Vietnam Enterprise Census (VEC) conducted annually since 2000 by the Vietnam General Statistical Office (GSO).

• Item Type: MPRA Paper
• Language: English
• Keywords: Competition, industry, economic transition, Vietnam
• Subjects: L - Industrial Organization > L5 - Regulation and Industrial Policy; P - Economic Systems > P3 - Socialist Institutions and Their Transitions > P30 - General; L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L11 - Production, Pricing, and Market Structure ; Size Distribution of Firms; P - Economic Systems > P2 - Socialist Systems and Transitional Economies > P20 - General; D - Microeconomics > D4 - Market Structure, Pricing, and Design > D40 - General

References

Amir, R. (2003). Market structure, scale economies and industry performance (CORE Discussion Paper No. 2003/65).

Athey, S., & Schmutzler, A. (2001). Investment and market dominance. RAND Journal of Economics, 32(1), 1-26.

Blundell, R., Griffith, J., & van Reenen. (1999). Market share, market value and innovation in a panel of British manufacturing firms. Review of Economic Studies, 66(3), 529-554.

Boone, J. (2000). Competition (Centre for Economic Research Working Paper Series No. 2636).

Boone, J. (2004). A new way to measure competition (TILEC Discussion Paper DP 2004-004), Tilburg University.

Boone, J. (2008). A new way to measure competition. The Economic Journal, 118(August), 1245-1261.

Bugamelli, M., Fabiani, S., & Sette, E. (2009). The pro-competitive effect of imports from China: An analysis on firm-level price data. Unpublished paper, Bank of Italy, Economic Research Department.

Carlin, W., Fries, S., Schaffer, M., & Seabright, P. (2001). Competition and enterprise performance in transition economies: Evidence from a cross-country survey (William Davidson Institute Working Paper No. 376), the University of Michigan.

Chen, N., Imbs, J., & Scott, A. (2009). The dynamics of trade and competition. Journal of International Economics, 77(1), 50-62.

Creusen, H., Minne, B., & van der Wiel, H. (2006a). Measuring competition in the Netherlands (CPB Netherlands Bureau for Economic Policy Analysis, CPB Memorandum No. 163).

Creusen, H., Minne, B., & van der Wiel, H. (2006b). Competition in the Netherlands: An analysis of the period 1993-2001 (CPB Netherlands Bureau for Economic Policy Analysis, No. 136).

Devine, H., Doan, T., Iyer, K., Mok. P., & Stevens, P. (2011). Competition in New Zealand industries: Measurement and evidence. Paper presented at the 2011 NZAE Annual Conference, Wellington.

Doan, T & Gibson, J. (2010). Return to schooling in Vietnam during economic transition: Does the return reach its peak? (Working Paper No. MPRA Paper No. 24984). Available at http://mpra.ub.uni-muenchen.de/24984/1/MPRA_paper_24984.pdf

Domowitz, I., & Hubbard, G., & Petersen, B. (1986). Business Cycles and the Relationship Between Concentration and Price-Cost Margins. RAND Journal of Economics, 17(1).

Griffith, R., Boone, J., & Harrison, R. (2005). Measuring Competition (AIM Research Working Paper No. 022).

GSO. (2010a). The enterprises in Vietnam 9 years at the beginning of century 21. Statistical Publishing House, General Statistics Office. Hanoi, Vietnam.

GSO. (2010b). Population and Housing Census, 1 April 2009 (Complete report and major findings, General Statistical Office). Hanoi, Vietnam.

Hakkala, K., & Kokko, A. (2007). The state and the private sector in Vietnam (Working Paper No. 236). Research Institute of Industrial Economics, Stockholm, Sweden.

Hersch, P., Kemme, D., & Bhandari, S. (1994). Competition in transition economies: determinants of price-cost margins in private sector manufacturing in Eastern Europe. Southern Economic Journal, 61(2), 356-366.

IMF. (2010). World Economic Outlook Database, International Monetary Fund, available at http://www.imf.org/external/pubs/ft/weo/2010/01/weodata/weoselser.aspx?a=&c=582&t=1

Konings, J., Cayseele, P., & Warzynski, F. (2003). The effects of privatization and international competitive pressure on firms’ price-cost margins: Micro evidence from emerging economies (Working Paper No. 03-17). Department of Economics, Aarhus School of Business. Available at http://www.hha.dk/nat/wper/03-17_fw.pdf

Lerner, A. (1934). The concept of monopoly and the measurement of monopoly power. Review of Economic Studies, 1(3), 157-175.

McNulty, P. (1968). Economic theory and the meaning of competition. The Quarterly Journal of Economics, 82(4), 639-656.

Nickell, S. (1996). Competition and Corporate Performance. Journal of Political Economy, 104(4), 724-46.

Raff, H., & Wagner, J. (2010). Intra-industry adjustment to import competition: Theory and Application to the German clothing industry. The World Economy, 33(8), 1006-1022.

Rosenthal, R. (1980). A model in which an increase in the number of sellers leads to a higher price. Econometrica, 48(6), 1575-1579.

Schiersch, A., & Schmidt-Ehmcke, J. (2010). Empiricism meets theory: Is the Boone-indicator applicable? DWI Berlin Discussion Papers No. 1030.

Stigler, G. (1957). Perfect competition, historically contemplated. Journal of Political Economy, 65, 1-17.

Stiglitz, J. (1989). Imperfect information in the product market. In Schmalensee, R., & Willig, R (eds), Handbook of Industrial Organization Vol. I. Amsterdam, the Netherlands.

Vagliasindi, M. (2001). Competition across transition economies: an enterprise-level analysis of the main policy and structural determinants (Working Paper No. 68). European Bank for Reconstruction and Development.