Assessing competition in the Turkish cement industry: insights from the Boone indicator

Abstract

Purpose

This paper investigates the degree of competitiveness within the Turkish cement industry, employing firm-level quarterly data spanning from 2008 to 2016.

Design/methodology/approach

To assess the level and trajectory of competition among Turkish cement firms, we employ the Boone indicator (β) as formulated by Boone (2008). This indicator, rooted in the concept of relative profit differences (RPD), serves as a robust metric for gauging competitive dynamics. According to the ß indicator, firms exhibiting higher relative efficiency are expected to secure greater profits and market shares in a fiercely competitive market. Additionally, we utilize concentration indices for the purpose of revealing comparable findings.

Findings

Empirical findings reveal that an enhancement in firms' efficiency corresponds to a proportionally modest increase in either market share or profits, implying a lower degree of competition within the Turkish cement industry. Although the specific magnitudes of ß estimates exhibit temporal fluctuations, we may conclude that the Turkish cement industry does not conform to the ideals of perfect competition. The concentration indices calculated on the sample also support this result.

Research limitations/implications

This research is limited to the Turkish cement companies over the period 2008–2016.

Originality/value

The studies measuring the level of competition in the Turkish cement sector are generally based on concentration ratios. In this study, we assess the competition level by using a different methodology based on parametric procedures.

Citation

Yıldız, H., Köprücü, Y. and Şengül, S. (2024), "Assessing competition in the Turkish cement industry: insights from the Boone indicator", Journal of Economic and Administrative Sciences, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/JEAS-10-2023-0280