Competition across transition economies: an enterprise-level analysis of the main policy and structural determinants

This paper examines the main policy and structural determinants of the intensity of competition at the enterprise level across transition economies, presenting new evidence based on an enterprise-level survey and a legal survey directed to both competition agencies and legal experts in the area of competition policy. It explores the key variables, at the country and enterprise level, that affect the variations of the intensity of competition in domestic markets. At the country level an important finding is that competition policy and recent changes in its implementation are significantly and positively correlated with the intensity of competition. This result is robust to the introduction of other policy-level controls and alternative specifications of the basic model. Other interesting results at the micro level include a significant positive relationship between the intensity of competition, lower barriers to entry and exit, and higher perceived elasticity of demand. In addition there are robust ownership, size and sectoral effects but not life-cycle effects.