Analysis of the structure, behavior, and performance of the confectionery industry in the Cali metropolitan area from 2002 to 2010
Keywords:
Industrial organization, market structure, industrial concentration, market power, entry barriers, costAbstract
This article provides a descriptive analysis of the confectionery industry in Cali during the time period from 2002 to 2010. It is aimed at identifying the existence of market power on the part of manufacturers. It follows a structure-behaviorperformance (SBP) approach and turns to the further developments of the New Empirical Industrial Organization (NEIO), both of which are part of the microeconomic theory of industrial organization. Three qualitative surveys were conducted among SMEs in the sector, using statistical information of various samples of manufacturing companies from the DANE (National Administrative Department of Statistics), and public information available from the mercantile registry records at the Cali Chamber of Commerce. It provides an estimate of the extent of market concentration and a comparison of the price variations and the quantities manufactured of different confectionery products against relevant indicators of the behavior of supplies and relevant macroeconomic variables. The purpose of this article is also to determine whether or not the proximity of sugar cane mills poses a competitive advantage for companies. The highlights of the findings reveal that there is a strong concentration of the sector which is dominated by a few companies. Although sugar is the primary raw material for all products, there is no evidence of any cost advantage associated with the geographic location. The most stable price patterns and quantities are found in the product category of traditional candy.
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References
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