Enjoying a Quiet Life Even During a Great Recession? Evidence From the Greek Olive Oil Industry
Abstract
The research investigates the link between market concentration and efficiency by analyzing the Greek olive oil industry data from 2006 to 2014. Unlike previous research on this issue, which focused on the impact of overall company efficiency on market power, we study the association between the three types of firm efficiency (profit, technical, and scale) and market concentration. Our theoretical framework and research assumptions were not predefined but were generated by modelling the data from the Greek oil olive sector through data mining techniques. The predicted causal relationships constructed in the preceding stage were investigated using partial least squares path modeling (PLS-PM) regression. The results show a significant negative relationship between market concentration and technical and profit efficiency. The paucity of completion resulted in prolonged firm inefficiencies, demonstrating that Greek enterprises, even during a severe recession, refrained from rigorous efforts to enhance technical and profit efficiency as they would in a competitive market, preferring instead to live a quiet life (QL). This study has several policy implications for regulators and policymakers, such as extending antitrust rules, which may enhance company efficiency and competitiveness.
References
References
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[32] Kao, C., and Hwang, S.N. 2008. Efficiency decomposition in two-stage data envelopment analysis: An application to non-life insurance companies in Taiwan. Eur J Oper Res, 185(1): 418-429. DOI: https://doi.org/10.1016/j.ejor.2006.11.041
[33] Khan, H.H., Ahmad, R.B., and Chan, S.G. 2018. Market structure, bank conduct and bank performance: Evidence from ASEAN. J Policy Model, 40(5): 934-958. DOI: https://doi.org/10.1016/j.jpolmod.2018.02.001
[34] Koetter, M., Kolari, J.W., and Spierdijk, L. 2012. Enjoying the quiet life under deregulation? Evidence from adjusted Lerner indices for US banks. Rev Econ Stat, 94(2): 462–480. DOI:https://doi.org/10.1162/REST_a_00155
[35] Kouki, I., and Al-Nasser, A. 2017. The implication of banking competition: Evidence from African countries. Res Int Bus Financ, 39: 878-895. DOI: https://doi.org/10.1016/j.ribaf.2014.09.009
[36] Lerner, A.P. 1934. The concept of monopoly and the measurement of monopoly power. Rev Econ Stud, 1(3): 157–175.
[37] Mason, E.S. 1939. Price and production policies of large-scale enterprise. Am Econ Rev, 29(1):61-74. DOI:https://www.jstor.org/stable/1806955%0D
[38] Maudos, J., and De Guevara, J.F. 2007. The cost of market power in banking: social welfare loss versus cost inefficiency. J Bank Financ, 31 (7): 2103–2125. DOI: https://doi.org/10.1016/j.jbankfin.2006.10.028
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[43] Rhoades, S.A. 1985. Market share as a source of market power: Implications and some evidence. J Econ Bus, 37(4): 343-363. DOI: https://doi.org/10.1016/0148-6195(85)90027-X
[44] Ringle, C.M., Wende, S. and Will, S. 2005. SmartPLS 2.0 M3 Beta. Available at: http://www.smartpls.de
[45] Sahile, S.W.G., Tarus, D.K., and Cheruiyot, T.K. 2015. Market structure-performance hypothesis in Kenyan banking industry. Int J Emerg Mark, 10(4): 697-710. DOI: http://dx.doi.org/10.1108/IJoEM-12-2012-0178
[46] Schmalensee, R. 1989. Inter-industry studies of structure and performance.In: Handbook of industrial organization 2, Amsterdam, North-Holland, pp 951-1009. DOI: https://doi.org/10.1016/S1573-448X(89)02004-2
[47] Seiford, L.M. and Zhu, J. 1999. Profitability and marketability of the top 55 US commercial banks. Manag. Manag. Sci, 45(9): 1270-1288. DOI: https://doi.org/10.1287/mnsc.45.9.1270
[48] Setiawan, M., Emvalomatis, G., and Lansink, A.O. 2012. The relationship between technical efficiency and industrial concentration: Evidence from the Indonesian food and beverages industry. J Asian Econ 23(4): 466-475. DOI: https://doi.org/10.1016/j.asieco.2012.01.002
[49] Shepherd, W.G. 1983. Economies of scale and monopoly profits. In: Industrial organization, antitrust, and public policy. Springer, Dordrecht, Boston, pp 165-204
[50] Simar, L., and Wilson, P.W. 2002. Non-parametric tests of returns to scale. Eur J Oper Res, 139(1): 115-132. DOI: https://doi.org/10.1016/S0377-2217(01)00167-9
[51] Sutton, J. 2007. Market structure: theory and evidence. Handbook of industrial organization, 3: 2301-2368. DOI: https://doi.org/10.1016/S1573-448X(06)03035-4
[52] Williams, J 2012. Efficiency and market power in Latin American banking. J Financ Stab, 8(4): 263-276. DOI:https://doi.org/10.1016/j.jfs.2012.05.001
[53] Wu, W.W., Lan, L.W., and Lee, Y.T. 2012. Exploring the critical pillars and causal relations within the NRI: An innovative approach. Eur J Oper Res, 218(1): 230-238. DOI: https://DOI:10.1016/j.ejor.2011.10.013
[1] Anzoategu, D., Peria M.S.M. and Rocha, R.R. 2010. Bank competition in the Middle East and Northern Africa region. Rev Middle East Econ Financ, 6 (2): 26- 48. DOI: https://doi.org/10.2202/1475-3693.1313
[2] Ariss, R.T. 2010. On the implications of market power in banking: Evidence from developing countries. J Bank Financ, 34(4): 765-775. DOI: https://doi.org/10.1016/j.jbankfin.2013.09.012
[3] Asongu S A, Odhiambo N M (2019). Testing the quiet life hypothesis in the African banking industry. J. Ind Compet Trade, 19(1): 69-82. DOI: https://doi.org/10.1007/s10842- 018- 0278-3
[4] Badunenko, O. 2010. Downsizing in the German chemical manufacturing industry during the 1990s. Why is small beautiful? Small Bus Econ, 34(4): 413-431. DOI: https://doi.org/10.1007/s11187-008-9142-x
[5] Baesens B, et al. 2004. Bayesian network classifiers for identifying the slope of the customer lifecycle of long-life customers. Eur J Oper Res, 156 (2): 508–523. DOI: https://doi:10.1016/S0377-2217(03)00043-2
[6] Bain, J.S. 1956. Barriers to new competition. Cambridge, Massachusetts: Harvard University Press.
[7] Beck, T., Demirguc‐Kunt, A.S., Laeven, L. and Levine, R. 2008. Finance, firm size, and growth. J. Money Credit Bank, 40(7): 1379-1405. DOI: https://doi.org/10.1111/j.1538-4616.2008.00164.x
[8] Berger, A.N., and Hannan, T.H. 1998. The Efficiency Cost of Market Power in the Banking Industry: A Test of the 'Quiet Life' and Related Hypotheses. Rev Econ Statistics, 80(3): 454-465. DOI:https://doi.org/10.1162/003465398557555
[9] Bikker, J.A. and Haaf, K. 2002. Competition, concentration and their relationship: An empirical analysis of the banking industry. J Bank Financ, 26(11): 2191-2214. DOI: https://doi.org/10.1016/S0378-4266(02)00205-4
[10] Boyer, R and Freyssenet, M. 2000. Les modèles productifs. La Découverte, Repères n 298, Paris.
[11] Carter, J.R. 1978. Collusion, efficiency, and antitrust. J Law Econ, 21(2): 435-444.
[12] Castelli, L., Pesenti, R., and Ukovich, W. 2010. A classification of DEA models when the internal structure of the decision-making units is considered. Ann Oper Res, 173(1): 207-235. DOI:https://doi.org/10.1007/s10479-008-0414-2
[13] Casu, B., and Girardone, C. 2009. Testing the relationship between competition and efficiency in banking: A panel data analysis. Econ Lett, 105(1): 134-137. DOI: https://doi.org/10.1016/j.econlet.2009.06.018
[14] Caves, R., and Barton, D.R. 1990. Efficiency in US Manufacturing Industries Cambridge, MA: MIT Press.
[15] Chao, J.C. and Swanson, N.R. 2005. Consistent estimation with a large number of weak instruments. Econometrica, 73(5): 1673-1692. DOI: https://doi.org/10.1111/j.1468-0262.2005.00632.x
[16] Chen, Y., Cook, W.D., Li, N. and Zhu, J. 2009. Additive efficiency decomposition in two-stage DEA. Eur J Oper Res, 196(3): 1170-1176. DOI: https://doi.org/10.1016/j.ejor.2008.05.011
[17] Chin, W.W. 1998. The partial least squares approach to structural equation modeling. In: Modern Methods for Business Research, Psychology Press, Talyor and Francis Group, New York, pp 295-336
[18] Coccorese, P. and Pellecchia, A. 2010. Testing the ‘quiet life hypothesis’ in the Italian banking industry. Econ Notes, 39(3):173-202. DOI: https://doi.org/10.1111/j.1468-0300.2011.00227.x
[19] Cowling, K. and Waterson, M. 1976. Price-cost margins and market structure. Economica, 43(171): 267-274. DOI: https://doi.org/10.2307/2553125
[20] Delis, M.D., and Tsionas, E.G. 2009. The joint estimation of bank-level market power and efficiency. J Bank Financ, 33(10): 1842–1850. DOI: https://doi.org/10.1016/j.jbankfin.2009.04.006
[21] Delorme, Jr C.D., Kamerschen, D.R., Klein, P.G., and Voeks, L.F. 2002. Structure, conduct and performance: a simultaneous equations approach. Appl Econ, 34(17): 2135-2141. DOI:https://doi.org/10.1080/00036840210135836
[22] Demsetz, H. 1973. Industry structure, market rivalry, and public policy. J Law Econ, 16(1): 1-9.
[23] Färe, R., Grosskopf, S., Maudos, J., and Tortosa-ausina, E 2015. Revisiting the quiet life hypothesis in banking using non-parametric techniques. J Bus Econ Manag, 16(1): 159-187. DOI:https://doi.org/10.3846/16111699.2012.726929
[24] Ferreira, C 2013. Bank market concentration and bank efficiency in the European Union: a panel Granger causality approach. Int Econ Econ Policy, 10(3): 365-391. DOI: https://doi.org/10.1007/s10368-013-0234-y
[25] Friedman, N., Geiger, D., and Goldszmidt, M. 1997. Bayesian network classifiers. Mach Learn, 29(2): 131-163. DOI: https://doi.org/10.1023/A:1007465528199
[26] Fu, X.M., and Heffernan, S. 2009. The effects of reform on China’s bank structure and performance. J Bank Financ 33(1): 39-52. DOI: https://doi.org/10.1016/j.jbankfin.2006.11.023
[27] Garza-García, J.G. 2012. Does market power influence bank profits in Mexico? A study on market power and efficiency. Appl Financial Econ, 22(1): 21-32. DOI: https://doi.org/10.1080/09603107.2011.595681
[28] Geroski, P.A. 1982. Simultaneous equations models in the structure-performance paradigm. Eur Econ Rev, 19: 145–58. DOI: https://doi.org/10.1016/0014-2921(82)90009-5
[29] Graddy, D.B. 1980. The measurement of market structure and its influence on bank prices and profitability. Neb J Econ Bus: 41–54. Available at: https://www.jstor.org/stable/40472669
[30] Gumbau-Albert, M, and Maudos, J. 2002. The determinants of efficiency: The case of the Spanish industry. Appl Econ, 35: 1941–1948. DOI: https://doi.org/10.1080/00036840210127213
[31] Hicks, J.R. 1935. Annual survey of economic theory: the theory of monopoly. Econ: J Econ Soc: 1-20.
[32] Kao, C., and Hwang, S.N. 2008. Efficiency decomposition in two-stage data envelopment analysis: An application to non-life insurance companies in Taiwan. Eur J Oper Res, 185(1): 418-429. DOI: https://doi.org/10.1016/j.ejor.2006.11.041
[33] Khan, H.H., Ahmad, R.B., and Chan, S.G. 2018. Market structure, bank conduct and bank performance: Evidence from ASEAN. J Policy Model, 40(5): 934-958. DOI: https://doi.org/10.1016/j.jpolmod.2018.02.001
[34] Koetter, M., Kolari, J.W., and Spierdijk, L. 2012. Enjoying the quiet life under deregulation? Evidence from adjusted Lerner indices for US banks. Rev Econ Stat, 94(2): 462–480. DOI:https://doi.org/10.1162/REST_a_00155
[35] Kouki, I., and Al-Nasser, A. 2017. The implication of banking competition: Evidence from African countries. Res Int Bus Financ, 39: 878-895. DOI: https://doi.org/10.1016/j.ribaf.2014.09.009
[36] Lerner, A.P. 1934. The concept of monopoly and the measurement of monopoly power. Rev Econ Stud, 1(3): 157–175.
[37] Mason, E.S. 1939. Price and production policies of large-scale enterprise. Am Econ Rev, 29(1):61-74. DOI:https://www.jstor.org/stable/1806955%0D
[38] Maudos, J., and De Guevara, J.F. 2007. The cost of market power in banking: social welfare loss versus cost inefficiency. J Bank Financ, 31 (7): 2103–2125. DOI: https://doi.org/10.1016/j.jbankfin.2006.10.028
[39] Nyangu, M., Marwa, N., Fanta, A., and Uwe, L.L. 2022. The Dynamics of Bank Concentration, Competition and Efficiency in the East African Community. J Ind Compet Trade, 22(1): 21-49. DOI:https://doi.org/10.1007/s10842-022-00379-7
[40] Panzar, J.C. and Rosse, J.N. 1982. Structure, conduct, and comparative statistics. Bell Telephone Laboratories.
[41] Peltzman, S. 1977. The gains and losses from industrial concentration. J Law Econ, 20(2): 229-263.
[42] Resende, M. 2007. Structure, conduct and performance: a simultaneous equations investigation for the Brazilian manufacturing industry. Appl Econ, 39(7): 937-942. DOI:https://doi.org/10.1080/00036840500461949
[43] Rhoades, S.A. 1985. Market share as a source of market power: Implications and some evidence. J Econ Bus, 37(4): 343-363. DOI: https://doi.org/10.1016/0148-6195(85)90027-X
[44] Ringle, C.M., Wende, S. and Will, S. 2005. SmartPLS 2.0 M3 Beta. Available at: http://www.smartpls.de
[45] Sahile, S.W.G., Tarus, D.K., and Cheruiyot, T.K. 2015. Market structure-performance hypothesis in Kenyan banking industry. Int J Emerg Mark, 10(4): 697-710. DOI: http://dx.doi.org/10.1108/IJoEM-12-2012-0178
[46] Schmalensee, R. 1989. Inter-industry studies of structure and performance.In: Handbook of industrial organization 2, Amsterdam, North-Holland, pp 951-1009. DOI: https://doi.org/10.1016/S1573-448X(89)02004-2
[47] Seiford, L.M. and Zhu, J. 1999. Profitability and marketability of the top 55 US commercial banks. Manag. Manag. Sci, 45(9): 1270-1288. DOI: https://doi.org/10.1287/mnsc.45.9.1270
[48] Setiawan, M., Emvalomatis, G., and Lansink, A.O. 2012. The relationship between technical efficiency and industrial concentration: Evidence from the Indonesian food and beverages industry. J Asian Econ 23(4): 466-475. DOI: https://doi.org/10.1016/j.asieco.2012.01.002
[49] Shepherd, W.G. 1983. Economies of scale and monopoly profits. In: Industrial organization, antitrust, and public policy. Springer, Dordrecht, Boston, pp 165-204
[50] Simar, L., and Wilson, P.W. 2002. Non-parametric tests of returns to scale. Eur J Oper Res, 139(1): 115-132. DOI: https://doi.org/10.1016/S0377-2217(01)00167-9
[51] Sutton, J. 2007. Market structure: theory and evidence. Handbook of industrial organization, 3: 2301-2368. DOI: https://doi.org/10.1016/S1573-448X(06)03035-4
[52] Williams, J 2012. Efficiency and market power in Latin American banking. J Financ Stab, 8(4): 263-276. DOI:https://doi.org/10.1016/j.jfs.2012.05.001
[53] Wu, W.W., Lan, L.W., and Lee, Y.T. 2012. Exploring the critical pillars and causal relations within the NRI: An innovative approach. Eur J Oper Res, 218(1): 230-238. DOI: https://DOI:10.1016/j.ejor.2011.10.013
Published
2023-06-26
How to Cite
KERAMIDOU, Ioanna; MIMIS, Angelos.
Enjoying a Quiet Life Even During a Great Recession? Evidence From the Greek Olive Oil Industry.
Theoretical and Practical Research in Economic Fields, [S.l.], v. 14, n. 1, p. 60 - 73, june 2023.
ISSN 2068-7710.
Available at: <https://journals.aserspublishing.eu/tpref/article/view/7863>. Date accessed: 10 may 2024.
doi: https://doi.org/10.14505/tpref.v14.1(27).06.
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