Competition policy and the impact of market structure on companies' profitability

Abstract

Competition policy has a role to ensure equal conditions for all market participants. This policy enables the realization of effective competiti- on, which is a prerequisite for economic and broader social progress. To make competition policy be of a good quality it must be based on the findings of economic science, in particular the one concerning indu- strial organizations and relationships among market structure, conduct and performance of companies (SCP). The analysis of these relationshi- ps is the way for identifying market imperfections and the consequen- ces that these imperfections have on society as a whole. The paper pro- motes economic analysis in the field of competition through empirical evaluation of industrial organization findings. Empirical research has shown a statistically significant positive impact of the change in market share on the change of the profit margin of companies operating in the Serbian beer market. Given that this market is highly concentrated, any increase in market share increases profit margin, and vice versa. Empiri- cal research conducted in the paper is a sound basis for the professional and economics-founded application of modern competition policy me- asures aimed at preventing and punishing anti-competitive behaviour