Firm Behavior in Oligopoly: Analysis of the Cement Industry
Chapter from the book: Akça, H. & Ata, A. Y. & Yurdadoğ, V. (eds.) 2023. Economic Policies and Transformation from Theory to Practice II.

Gülçin Gürel Günal
Ege University

Synopsis

Oligopoly is a market structure in which a small number of large-scale firms produce homogeneous or differentiated goods or services. Due to the small number of firms, they are highly dependent on each other in this market. In other words, in such markets where price and non-price firm behavior is observed, the decisions taken by each firm also affect other firms. Consequently, firms closely monitor each other's actions and base their decisions on what others do. Sometimes, instead of competing, firms may cooperate to maximize profits through joint actions. Such cooperation can take two forms: explicit and implicit agreements. This study examines the firms behavior in the cement industry to identify potential collusion, a type of agreement among firms. In this context, 10 large-scale cement firms among the 500 large industrial enterprises between 2002 and 2021 are taken into account. The possibility of collusion regarding production decisions is being evaluated. For this purpose, the concentration level of the cement sector is initially determined using the CRn and HHI methods. Subsequently, firms' responses to the production decisions of other firms are observed through a two-stage forecasting process. The results reveal that there is no concentration in the cement industry and firms do not follow each other in their production decisions. These findings suggest that there is no evidence of collusion among the firms operating in the cement industry.

How to cite this book

Gürel Günal, G. (2023). Firm Behavior in Oligopoly: Analysis of the Cement Industry. In: Akça, H. & Ata, A. Y. & Yurdadoğ, V. (eds.), Economic Policies and Transformation from Theory to Practice II. Özgür Publications. DOI: https://doi.org/10.58830/ozgur.pub294.c1276

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Published

October 21, 2023

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