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Article
Publication date: 1 August 2001

Gerrit Meijer

Tries to assess the place of Da Empoli’s Theory of Economic Equilibrium, a book on the development of thinking on market structures and price theory. It is an early and…

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Abstract

Tries to assess the place of Da Empoli’s Theory of Economic Equilibrium, a book on the development of thinking on market structures and price theory. It is an early and important, though almost neglected, contribution. Neglected because the main developments in the 1930s and later on were on market classifications and theories of pricing within these market structures, as developed by Chamberlin, Robinson, Stackelberg, Triffin, and de Jong. Chamberlin and Robinson who knew the study either did not pay attention to and/or did not understand the true nature of the work. The approach was too different from theirs. Da Empoli’s work is on the process of competition. In this he has affinity to work of Knight and Clark written in the 1920s. This approach had some later defenders in the 1940s in Clark, Eucken and Hayek. Around 1960 it got a more prominent place in the work of Clark, Hayek, de Jong and Stigler. At almost the same time the other approach petered out, casu quo came to a close.

Details

Journal of Economic Studies, vol. 28 no. 4/5
Type: Research Article
ISSN: 0144-3585

Keywords

Abstract

Details

Fostering Productivity: Patterns, Determinants and Policy Implications
Type: Book
ISBN: 978-1-84950-840-7

Book part
Publication date: 29 December 2016

Hanh Thi My Phan and Kevin Daly

This study aims to investigate both market concentration and bank competition of banking across six emerging Asian countries (e.g., Bangladesh, Indonesia, India…

Abstract

This study aims to investigate both market concentration and bank competition of banking across six emerging Asian countries (e.g., Bangladesh, Indonesia, India, Philippines, Malaysia, and Vietnam) over pre and post the 2008 global financial crisis. The conduct parameter approach following the framework suggested by Uchida and Tsutsui (2005) is used to estimate bank competition in these countries. The study employs both seemingly unrelated regression (SUR) and three-stage least squares (3SLS) to estimate simultaneously the system of equations in our model. Generally we find a negative association between market concentration and bank competition across most of the countries in the study suggesting that banks in concentrated markets collude to generate higher profits. Monopolistic competition was the best description of competitive structure of banking across the majority of countries investigated by this study. The study fills the gap in the banking literature by investigating bank competition, concentration, and their relationship across emerging Asian economies over the 2008 global financial crisis. Moreover, several policy implications for banking industry are suggested.

Details

Risk Management in Emerging Markets
Type: Book
ISBN: 978-1-78635-451-8

Keywords

Article
Publication date: 11 October 2021

Nam Ho

Fears over public accounting becoming increasingly concentrated have inspired several attempts to study the relationship between competition and audit quality. These…

Abstract

Purpose

Fears over public accounting becoming increasingly concentrated have inspired several attempts to study the relationship between competition and audit quality. These studies have yielded conflicting results without a clear reason as to why. This paper aims to propose a new approach and empirically demonstrate a non-monotonic association between competition and audit quality.

Design/methodology/approach

Using metropolitan statistical area level data from the USA over the period of 2000–2014, the author shows that the effect that changes in the competition will have on audit quality depends upon the current competitive state of the market.

Findings

Audit quality is at its highest level when competition is neither too high nor too low. In addition, the point of inflection at which competition turns from being helpful to harmful is influenced by the saturation of the Big 4 auditors in the market.

Practical implications

These findings can help explain the mixed results of the literature and provide insight into the role that regulators can play in modulating competition.

Originality/value

This is the first paper to document a non-monotonic relationship between competition and audit quality. By introducing and exploring the validity of a non-monotonic component in the audit quality equation, the authors can better determine, which competitive structures generate desired levels of audit quality.

Details

Managerial Auditing Journal, vol. 37 no. 1
Type: Research Article
ISSN: 0268-6902

Keywords

Article
Publication date: 25 February 2014

Lokman Mia and Lanita Winata

The extant literature suggests that an increasing number of organisations are adopting manufacturing strategies such as JIT practices to continuously improve provision of…

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Abstract

Purpose

The extant literature suggests that an increasing number of organisations are adopting manufacturing strategies such as JIT practices to continuously improve provision of products and associated services desired by customers. The authors aim to investigate the relationship between adoption (implementation) of JIT practices and organisational performance taking into account the role of market competition and managerial use of management accounting system (MAS) information.

Design/methodology/approach

Data for the study were collected from 92 general managers of Australian manufacturing organisations. Mailed questionnaire and personal interviews were used to collect the data.

Findings

The results reveal that market competition and managerial use of MAS (hereafter, the use of MAS) information impact the relationship between an organisation's adoption of JIT practices and its financial performance. The results reported in prior studies on the relationship are mixed; some studies report a positive relationship while others report no relationship. This study explains with empirical evidence when adoption of JIT practices provides financial benefits and when it does not.

Research limitations/implications

The results are of interest to researchers and managers to understand performance implications of adoption of JIT practices and the use of MAS information. For researchers, the results make an incremental contribution to knowledge by revealing that adoption of JIT practices is beneficial in situations where it is supported by the use of MAS information in high competition market. For managers, the results highlight that an organisation will perform better in competitive market if it adopts JIT practices and its managers' information needs are met by its MAS. Specifically, the results will help managers to decide when adoption of JIT practices is beneficial, thereby help prevention of suboptimal decisions and the associated costs.

Originality/value

The study challenges the inconclusive results reported in previous studies on the relationship between firms' adoption of JIT practices and financial performance and offers explanations for those results. The results show that benefits from an organisation's adoption of JIT practices are not universal. Rather, the benefits occur in situations where the use of MAS information and market competition are high.

Details

Journal of Accounting & Organizational Change, vol. 10 no. 1
Type: Research Article
ISSN: 1832-5912

Keywords

Article
Publication date: 21 November 2018

Jingbo Yuan, Zhimin Zhou, Nan Zhou and Ge Zhan

This paper aims to examine the effect of product market competition on firms’ unethical behavior (FUB) in the Chinese insurance industry and to further explore the…

Abstract

Purpose

This paper aims to examine the effect of product market competition on firms’ unethical behavior (FUB) in the Chinese insurance industry and to further explore the boundary conditions of the main effects. On the basis of China’s commercial foundation, the study constructs a conceptual framework of FUB by drawing from the perspective of horizontal competition.

Design/methodology/approach

Data were collected from 52 property insurance firms at the branch level observed over the six-year period, 2011-2016. Within this framework, market power and market concentration were used to describe product market competition at firm and industry levels, respectively. The moderating effect of market munificence was analyzed to reveal the theoretical boundaries of the main effect. By drawing upon cost–benefit analysis and social network theory, the study used negative binomial model and Poisson model to quantitatively examine the relationship.

Findings

The relationship between product market competition and FUB is curvilinear. Especially at the firm level, market power exhibits a U-shape relationship with FUB; at the industry level, market concentration exhibits a U-shape relationship with FUB. In addition, market munificence positively moderates the impact of firm’s market power on FUB, whereas, market munificence negatively moderates the impact of industrial market concentration on FUB.

Research limitations/implications

This paper explored a new type of unethical behavior that concerns consumers or the third party by emphasizing horizontal competitive contexts; it also provides a better understanding of the FUB–financial performance relationship from the perspective of competition. The moderating effects suggest that when the cause of FUB is different (market power vs market concentration), firms may make opposite ethical choice. However, the sample is from a single industry; it will be fruitful to further verify these findings in other industries such as the manufacturing sector. Moreover, the definition of FUB is confined to explicit forms such as participation or collusion but there is no way to measure the implicit forms of FUB.

Practical implications

First, the governance of FUB should not only focus on the firms themselves, but also take into account the industrial market structure. Second, proper use of governance measures for FUB can increase firms’ benefits from “compliance with the law”, enticing firms to decrease FUB. The third, firms with weak market positions, facing fierce competition, should not be involved in FUB for short-term benefit; indeed, a low-cost strategy can be adopted as the dominant competitive strategy. While, in cases of highly concentrated market structure, firms should strive to avoid involvement in FUB through collusion with other rivals.

Social implications

As it is a very common phenomenon that firms in competitive relationships may adopt FUB toward third parties or consumers, this trend has become a hot topic in the economic and social development in China. The study’s conclusions reveal that a more proactive and ambitious ethical decision is desirable for all kinds of firms; moreover, firms should make a rational choice between “short-term interest” and “long-term survival”. When firms identify the compliance of business ethics as an opportunity to differentiate themselves and perceive the benefits of decreasing FUB as outweighing the costs, the level of FUB will be inhibited, and social welfare will increase.

Originality/value

The primary contribution of this research resides in identifying product market competition as a previously unexplored predictor of FUB, thus revealing the dark side of product market competition. In addition, nonlinear relationships between product market competition and FUB indicate that situations of competition exert an important influence on FUB both at the firm and industry level. This paper’s conclusion provides a more meticulous theoretical explanation for FUB. This research demonstrates that the traditional ethical framework is not sufficient to explain FUB in a horizontal competitive context. Indeed, resource constraints and competitive pressures should also be considered.

Details

Chinese Management Studies, vol. 13 no. 2
Type: Research Article
ISSN: 1750-614X

Keywords

Article
Publication date: 14 May 2019

Sitikantha Parida

The purpose of this paper is to investigate the impact of competition in financial markets on the frequency of portfolio disclosures by mutual funds and its implications…

Abstract

Purpose

The purpose of this paper is to investigate the impact of competition in financial markets on the frequency of portfolio disclosures by mutual funds and its implications for consumer search costs.

Design/methodology/approach

The empirical analysis merges the Center for Research in Security Prices (CRSP) survivorship bias-free mutual fund database, the Thompson Financial CDA/ Spectrum holdings database and the CRSP stock price data. The sample covers the time period between 1993 and 2010 and OLS and logistic regressions are used to investigate the impact of competition on fund disclosures.

Findings

This paper finds that mutual fund disclosures decrease with market competition and this effect is amplified for funds holding illiquid assets. These results provide empirical support for the findings of Carlin et al. (2102). Mutual funds use portfolio disclosures as a marketing tool to attract investments in a tournament-like market, where superior relative performance and greater visibility are rewarded with convex payoffs. With competition, the likelihood of receiving new investments decreases for each fund and funds respond by reducing costly voluntary disclosures. The disclosure costs are higher for funds holding illiquid assets, and hence, the effect is stronger for them.

Originality/value

This paper has important policy implications for disclosures in a market where relative performance matters. The traditional view is that competition induces voluntary disclosure because entities would like to differentiate themselves from competitors, and hence, competition should increase market transparency. However, this paper sheds light on the negative consequence of competition in a tournament-like mutual fund market.

Details

Review of Accounting and Finance, vol. 18 no. 2
Type: Research Article
ISSN: 1475-7702

Keywords

Article
Publication date: 22 July 2019

Pablo Cabanelas, Luciana C. Manfredi, Juan M. González-Sánchez and Jesús F. Lampón

Multimarket competition is an area of competitive dynamics focused on studying situations where firms compete against each other simultaneously in more than one market

Abstract

Purpose

Multimarket competition is an area of competitive dynamics focused on studying situations where firms compete against each other simultaneously in more than one market. The intensity of competition depends on the aggressiveness and the market contingencies, influencing the competitive strategies. Particularly, the purpose of this paper is to explore the influence of multimarket competition and market contingencies on innovation.

Design/methodology/approach

An exploratory qualitative approach using the Grounded Theory is applied with conceptual purposes. The data were collected through in-depth semi-structured interviews and additional observations with senior strategies and decision-makers. The paper follows an extensive narrative to understand decision-taking processes on competitive strategy with the support of analytical software. The paper was performed in the automotive components industry making seats in two different countries to acknowledge the influence of market contingencies.

Findings

The results suggest that multimarket competition does not reduce the level of aggressiveness, but it offers a background that favors opportunities for companies and new business in circumstances of crisis associated to innovation. Depending on the market contingencies, strategies can foster a higher technological innovation, in those cases of high development in the industry, or diversification, when the development is lower.

Originality/value

This paper contributes to enrich multimarket competition theory with the study of innovation strategies in different market conditions, a topic not much explored in multimarket literature. Additionally, it suggests implications for managers attending to different market contingencies.

Details

Journal of Business & Industrial Marketing, vol. 35 no. 3
Type: Research Article
ISSN: 0885-8624

Keywords

Article
Publication date: 13 March 2019

Hongbin Huang, Ran Li and Ya Bai

The purpose of this paper is to study the influence of investor sentiment on the supply of trade credit, and further explores the difference of the effect of investor…

Abstract

Purpose

The purpose of this paper is to study the influence of investor sentiment on the supply of trade credit, and further explores the difference of the effect of investor sentiment on the supply of trade credit in the environment of strong market competition and weak market competition.

Design/methodology/approach

The authors use panel estimation techniques to examine the impact of investor sentiment in the Chinese securities market on the supply of corporate trade credit.

Findings

This paper finds that investor sentiment has positive impact on trade credit through three channels of motivation, willingness and ability. At the same time, this paper finds that investor sentiment has stronger impact on enterprises in strong market competition than enterprises in weak market competition.

Research limitations/implications

This paper expands the research on the influence of virtual economy on the real economy, analyzes the difference of the influence of investor sentiment on the supply of trade credit under different market competition conditions.

Practical implications

The paper perfects the mechanism of trade credit decision-making at this stage, and provides more evidence for the virtual economy to act on the real economy.

Social implications

This paper provides a theoretical basis for the government functional departments to use the investor sentiment to play a positive role in trade credit to improve the market competition and guide the development of China’s capital market in the direction of rationalization and health.

Originality/value

In combination with market competition environment and industry characteristics, this paper investigates external irrational factors and studies how investor sentiment affects trade credit supply.

Details

China Finance Review International, vol. 9 no. 2
Type: Research Article
ISSN: 2044-1398

Keywords

Article
Publication date: 8 May 2009

Barbara Casu and Claudia Girardone

The purpose of this paper is to assess the outcome of European Union (EU) deregulation and competition policies on the competitive conditions of the main EU banking markets.

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Abstract

Purpose

The purpose of this paper is to assess the outcome of European Union (EU) deregulation and competition policies on the competitive conditions of the main EU banking markets.

Design/methodology/approach

After a review of deregulation and competitition policies in the EU banking industry, the degree of competition in the largest five EU banking markets using is tessted both structural (concentration ratios and Herfindahl‐Hirshman indices) and non‐structural (H‐statistics and Lerner index) approaches.

Findings

Results indicate that EU banking markets are becoming progressively more concentrated and that there is no evidence of an increase in competitive pressure. Country differences are also apparent thereby indicating that despite the sustained regulatory interventions, significant barriers to the integration of EU retail banking markets remain. In line with recent literature, the analysis also seems to provide further evidence that concentration is not necessarily a good proxy for competition.

Originality/value

Increased market concentration and its effects on competition are of relevance in a period of renewed EU regulatory efforts to remove the remaining barriers to the integration of financial markets. The evaluation of competitive conditions and market power in EU banking are therefore of interest to policy‐makers and regulators.

Details

Journal of Financial Regulation and Compliance, vol. 17 no. 2
Type: Research Article
ISSN: 1358-1988

Keywords

1 – 10 of over 94000