The present paper provides first microlevel (indirect) empirical evidence on changes in the determinants of firm profitability, the role of fixed and sunk costs, as well as the nature of competition for a transition economy. We estimate size thresholds required to support different numbers of firms for four retail and professional service industries in a large number of geographic markets in Slovakia. The three time periods in the analysis (1995, 2001 and 2010) characterize different stages of the transition process. Specific emphasis is given to spatial spill-over effects between local markets. Estimation results obtained from a spatial ordered probit model suggest that entry barriers have declined considerably (except for restaurants) and the intensity of competition has increased. We further find that demand spill-overs and/or the effects associated with a positive correlation in unobservable explanatory variables seem to outweigh negative spill-over effects caused by competitive forces between neighboring cities and villages. The importance of these spatial spill-over effects differs across industries. / Series: Department of Economics Working Paper Series

The present paper provides first empirical evidence on the relationship between market size and the number of firms in the healthcare industry for a transition economy. We estimate market-size thresholds required to support different numbers of suppliers (firms) for three occupations in the healthcare industry in a large number of distinct geographic markets in Slovakia, taking into account the spatial interaction between local markets. The empirical analysis is carried out for three time periods (1995, 2001 and 2010) which characterise different stages of the transition process. Our results suggest that the relationship between market size and the number of firms differs both across industries and across periods. In particular, we find that pharmacies, as the only completely liberalised market in our dataset, experience the largest change in competitive behaviour during the transition process. Furthermore, we find evidence for correlation in entry decisions across administrative borders, suggesting that future market analysis should aim to capture these regional effects.

This article investigates the influence of competition on price and product quality among Austrian camping sites, a market characterized by both horizontal (spatial) and vertical product differentiation. Theoretically, the effect of competition on quality is ambiguous and depends on the degree of cost substitutability between output and quality. Estimating a system of equations shows that intense competition has a positive impact on product quality and a negative effect on prices (conditional on quality). As high quality is associated with high prices, the total effect of competition on prices is rather small.

The present article provides first microlevel (indirect) empirical evidence on changes in entry barriers, the determinants of firm profitability as well as the nature of competition for a transition economy. We estimate size thresholds required to support different numbers of firms for several retail and professional service industries in a large number of geographic markets in Slovakia. The 3 time periods in the analysis (1995, 2001 and 2010) characterize different stages of the transition process. Specific emphasis is given to spatial spill-over effects between local markets. Estimation results obtained from a spatial ordered probit model suggest that entry barriers have declined considerably (except for restaurants) and that the intensity of competition has increased on average. We further find that demand spill-overs and/or the effects associated with a positive correlation in unobservable explanatory variables seem to outweigh negative spill-over effects caused by competitive forces between neighbouring cities and villages. The importance of these spatial spill-over effects differs across industries.

The present paper provides first empirical evidence on the relationship between market size and the number of firms in the healthcare industry for a transition economy. We estimate market-size thresholds required to support different numbers of suppliers (firms) for three occupations in the healthcare industry in a large number of distinct geographic markets in Slovakia, taking into account the spatial interaction between local markets. The empirical analysis is carried out for three time periods (1995, 2001 and 2010) which characterise different stages of the transition process. Our results suggest that the relationship between market size and the number of firms differs both across industries and across periods. In particular, we find that pharmacies, as the only completely liberalised market in our dataset, experience the largest change in competitive behaviour during the transition process. Furthermore, we find evidence for correlation in entry decisions across administrative borders, suggesting that future market analysis should aim to capture these regional effects.

In the years following the financial crisis, Greece experienced a severe loss in real per capita income and accumulated a public debt much higher than GDP and that of any other EU country. The article briefly analyses the causes of this development, including the policy failures of Greece and the EU. It develops a game-changing strategy, which could return the country to a growth path. This starts with the vision that Greece can make use of its unique location between Europe, Asia and Africa to build a bridge connecting these regions with fascinating and productive complementarities. Given this new strategy, including regional leadership in decarbonisation, youth reform boards, and the Greek diaspora as a manager of reforming and financing new activities, Europe should cut a substantial part of the debt. This would be in the interest of Greece, the EU and Europe's neighbours. / Series: Department of Economics Working Paper Series

In this study we investigate the impact of trust on the performance of cooperating firms, taking into account two core aspects: First, we look at environmental uncertainty, which shows in the degree of change there is in business freedom. Second, we account for behavioral uncertainty-captured as the average level of freedom from corruption in a country. Based on survey data from 791 firms engaged in national cooperation in Austria, the Czech Republic, Finland, Hungary, Slovakia and Slovenia, we find that behavioral coordination based on trust impacts on cooperating firms' performance positively in dynamic and negatively in stable contexts. Freedom from corruption enhances firm performance in dynamic contexts but is not a significant predictor in stable contexts. Further, we find the trust-performance relationship to be moderated by freedom from corruption in dynamic but not in stable contexts. The findings contribute to a more contextualized research on trust and interorganizational cooperation, as has been called for recently. (authors' abstract)

This paper offers an empirical analysis of net job creation patterns at the firm level for the Austrian economy between 1993 and 2013 focusing on the impact of firm size and age. We propose a new estimation strategy based on a two-part model. This allows to identify the structural parameters of interest and to decompose behavioral differences between exiting and surviving firms. Our findings suggest that conditional on survival, young Austrian firms experience the largest net job creation rates. Differences in firm size are not able to explain variation in net job creation rates among the group of continuing enterprises. Job destruction induced by market exit, however, is largest among the young and small firms with this effect being even more pronounced during the times of the Great Recession. In order to formulate sensible policy recommendations, a separate treatment of continuing versus exiting firms as proposed by the new two-part model estimation approach seems crucial.(authors' abstract) / Series: Department of Economics Working Paper Series