Market Structure Conduct And Performance Paradigm Applied To The Ethiopian Cement Manufacturing Industry

This paper presents a market structure, conduct, performance (SCP) analysis of industrialrneconomics to study the relationships that existed between market structure, conduct andrnperformance ,within the Ethiopian cement industry by employing a simultaneous equationsrnframework Based on data gathered from twelve cement manufacturing industries for fivernyears, the paper has developed market share, advertising and profitability equations as itsrnthree simultaneous equations and estimates the coefficients using Three Stage Least Squaresrn(3SLS) estimation method. Though estimation of the system uses a small number ofrnobservations and lacks data on additional instrumental variables the main 3SLS results fromrnthe analysis of/he system of equations are found out to be : (1) there is a positive, significantrnand two way causes and effects relationship between market structure (market shares) andrnfirms' strategic behavior (advertising intensity); (2) a similar positive and two way causesrnand effects relationship is found between profitability and advertising intensity; and (3) therernis no any significal1l effect of market structure on firms profitability though the latter affectsrnthe former negatively and significantly.rnKey words: Cement Industry, market structure, conduct, performance.

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