Market Structure, Conduct and Performance Paradigm Applied to the Ethiopian Cement Manufacturing Industry
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Date
2012-06
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A.A.U
Abstract
This paper presents a market structure, conduct, performance (SCP) analysis of industrial
economics to study the relationships that existed between market structure, conduct and
performance ,within the Ethiopian cement industry by employing a simultaneous equations
framework Based on data gathered from twelve cement manufacturing industries for five
years, the paper has developed market share, advertising and profitability equations as its
three simultaneous equations and estimates the coefficients using Three Stage Least Squares
(3SLS) estimation method. Though estimation of the system uses a small number of
observations and lacks data on additional instrumental variables the main 3SLS results from
the analysis of/he system of equations are found out to be : (1) there is a positive, significant
and two way causes and effects relationship between market structure (market shares) and
firms' strategic behavior (advertising intensity); (2) a similar positive and two way causes
and effects relationship is found between profitability and advertising intensity; and (3) there
is no any significal1l effect of market structure on firms profitability though the latter affects
the former negatively and significantly.
Key words: Cement Industry, market structure, conduct, performance.
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Keywords
Cement Manufacturing Industry, Market Structure