Industry competitiveness using Herfindahl and entropy concentration indices with firm market capitalization data

Nawrocki, David N.; Carter, William

doi:10.1080/00036840801964666

Cited by 37 publications

(23 citation statements)

References 20 publications

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“…After 2006, the market was un-concentrated; hence evidencing monopolistic competition or effective competition structure (Gwin 2001). Besides, according to Nawrocki and Carter (2010), the entropy measure has been accepted in the economics literature as a measure of competition. The higher the entropy value, the higher the degree of competitiveness.…”

Section: Methodsmentioning

confidence: 99%

Market Concentration of Malaysia’s Islamic Banking Industry

Mohammed¹,

Ismail²,

Muhammad³

et al. 2015

JEM

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The aim of this paper is to evaluate the nature and changes of market concentration in the Malaysia's Islamic banking due to the restructuring of Islamic banking industry within the liberalization wave in the banking market. A total of 17 Islamic banks operating over the period of 2000-2010 had been considered. The structural approach framework was used to evaluate the nature and changes of market concentration in the Islamic banking industry in Malaysia. Under this approach, various market concentration indexes has been calculated from year to year basis as proposed by the industrial organizational field. Findings herein supported the structure-conduct-performance (SCP) paradigm where different concentration ratios have decreased over the study's period where this is reflected in the greater degree of competition in the Malaysia's Islamic banking industry. This study found an evidence that structural changes in the Islamic banking market has changed the market structure of the respective market from moderately concentrated to low concentrated market; whereby supporting the existence of competitive environment in the Malaysian Islamic banking market. Present study contributed to new knowledge in banking market concentration particularly for Islamic banking industry in the emerging economies such as Malaysia. Many past studies studying this issue had extensively examined the conventional banking system, but only several studies were on Islamic banking market. Hence, this study may enrich the existing literature on this issue, particularly for the Islamic banking industry. Policy recommendation from the findings; first, Malaysian Islamic banking industry needs a contestable market environment as to enable them to achieve better profit and efficient operation. Second, concentration ratios from this study can be used to identify the optimal number of banking firms in the Islamic banking industry.

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Section: Methodsmentioning

confidence: 99%

Market Concentration of Malaysia’s Islamic Banking Industry

Mohammed¹,

Ismail²,

Muhammad³

et al. 2015

JEM

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show abstract

“…Some of the smaller market shares are not given in Table 2 because of space limitation, but were included in the computations. The H, which has been used as a measure of market concentration or rather of its converse, deconcentration (e.g., [28]), would indicate that these two industries have nearly the same market deconcentration. By contrast, when considered in terms of H K for which such comparison is valid because of the value-validity property of H K , the results in Table 2 show that the cell-phone industry is about 20% more deconcentrated than the soft-drink industry.…”

Section: Discussionmentioning

confidence: 99%

On the Measurement of Randomness (Uncertainty): A More Informative Entropy

Kvålseth

2016

Entropy

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As a measure of randomness or uncertainty, the Boltzmann-Shannon entropy H has become one of the most widely used summary measures of a variety of attributes (characteristics) in different disciplines. This paper points out an often overlooked limitation of H: comparisons between differences in H-values are not valid. An alternative entropy H K is introduced as a preferred member of a new family of entropies for which difference comparisons are proved to be valid by satisfying a given value-validity condition. The H K is shown to have the appropriate properties for a randomness (uncertainty) measure, including a close linear relationship to a measurement criterion based on the Euclidean distance between probability distributions. This last point is demonstrated by means of computer generated random distributions. The results are also compared with those of another member of the entropy family. A statistical inference procedure for the entropy H K is formulated.

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“…In past academic research, the comparison between the HHI and CR has been subject to some debate. Most comparisons have pointed out the HHI superiority over the M-firm concentration rate (Nawrocki and Carter, 2010). Consequently, for low levels of concentration, non-cooperative behaviour makes little difference for industry performance.…”

Section: Jmbace 113mentioning

confidence: 99%

Market Structure and Price-Cost Margins in European Retail Gasoline Industry

Nowakowski

Karasiewicz

2016

JMBACE

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Purpose: The purpose of this study was to investigate the influence of market structure and market conduct characteristics (such as market concentration, presence of networks operated by global corporations, presence of vertically integrated companies, presence of hypermarket gasoline stations and consumption level) on price-cost margin levels, based on an example of the European Union retail gasoline market. Methodology:The research applied regression analysis on a panel data set comprising of average monthly price-cost margins for 2012 to 2015, based on the data published in the European Commission Oil Bulletin, and on a set of variables characterizing market structure and market conduct of 24 European Union member state countries. Findings:The results showed that in the case of retail gasoline markets, higher industrial concentration yields higher price-cost margins with a statistically significant influence of other market structure and conduct factors.

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Industry competitiveness using Herfindahl and entropy concentration indices with firm market capitalization data

Cited by 37 publications

References 20 publications

Market Concentration of Malaysia’s Islamic Banking Industry

Market Concentration of Malaysia’s Islamic Banking Industry

On the Measurement of Randomness (Uncertainty): A More Informative Entropy

Market Structure and Price-Cost Margins in European Retail Gasoline Industry

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