Competition in Central and Eastern Europe: Stylised Facts and Determinants

This paper uses the Amadeus firm-level database to examine sector-specific indicators of competition in a number of Central and East European (CEE) countries. More specifically, the paper provides an overview of three key indicators for the level of competition, namely profit margins, the concentration of sales and entry rates across 27 industries in 13 CEE countries. The paper discusses the advantages and disadvantages of various indicators of competition that are commonly used in the literature and explains why we use the aforementioned three proxy variables for the intensity of competition. The paper then provides a cross-country and cross-sector overview of the differences in these competition indicators for the period 1999-2007 before identifying empirically the main determinants for these differences. JEL classification: C23, D40, L11, L52

Keywords: Competition, Central and Eastern Europe, profit margins, firm-level data