Title: RELATIONSHIP BETWEEN TECHNICAL EFFICIENCY AND MARKET CONCENTRATION IN THE CEMENT INDUSTRY IN INDONESIA
Author: MOCHAMAD TAUFIQ PRASETYO,
Universitas Airlangga
Item Type : Thesis (Thesis)
Abstract
The development of the real sector in Indonesia, particularly construction, infrastructure, and property, has driven increased demand for cement products. The cement industry is currently seen as a highly prospective industry, leading to the emergence of new players entering the industry in Indonesia. Therefore, the cement industry in Indonesia strives to maintain its position to compete with these new players. Through technical efficiency, cement companies strive to compete with new players. From 2001 to 2011, cement companies in Indonesia were still concentrated in only four large companies. The idea of the relationship between technical efficiency and market concentration will be applied in this study. If technical efficiency affects market concentration, then the industry's behavior in that market falls into the category of the Efficient-Structure (ES) Hypothesis. Conversely, if market concentration negatively affects technical efficiency, then the behavior in that market falls into the category of the Quiet-Life (QL) Hypothesis. The calculation of technical efficiency uses the Data Envelopment Analysis (DEA) tool, while the calculation of market concentration uses the Concentration Ratio-4 (CR4). To determine the direction of the relationship between technical efficiency (TE) and market concentration (CR), a Vector Auto Regressive (VAR) model is used and tested with the Granger Causality Test. The final results show that technical efficiency in the cement industry influences market concentration. The cement industry's behavior during 2001-2011 falls into the Efficient-Structure (ES) Hypothesis.
Keywords : technical efficiency, market concentration, the cement industry