Working Paper: CEPR ID: DP3022
Authors: J David Brown; John S Earle
Abstract: This Paper investigates whether the efficiency effect of product market dispersion is a function of the infrastructural and policy environment. We hypothesise that more developed transportation and communication infrastructure and lower government regulation may reduce transaction costs, intensifying the competition associated with a given market structure, and we use data from the recently liberalized and regionally diverse country of Russia to test the hypothesis. Estimating translog production functions on a large 1992-99 panel of manufacturing firms, we find that the efficiency impact of market dispersion varies positively with the regional density of highway, railroad and telephone infrastructure, but negatively with regional price regulation and the share of votes received by the Communist Party.
Keywords: competition; infrastructure; market structure; Russia; transition
JEL Codes: H54; L10; L50; P23; P31
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Higher regional density of transportation infrastructure (R42) | Efficiency impact of market dispersion on firm productivity (F61) |
| Increased regional price regulation (L51) | Efficiency impact of market dispersion on firm productivity (F61) |
| Higher share of votes for the communist party (P30) | Efficiency impact of market dispersion on firm productivity (F61) |
| Improved infrastructure (H54) | Competitive effects of market structure (D40) |