Journal of Rural Development
An Analysis of the Effect of Concentration on the Profitability of Food Processing Business Firms
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AuthorShin, Yoojin
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Publication Date2015.06.21
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Original
In Korea, food processing business firms have increased the level of concentration in their industry in order to achieve the better efficiency and competitiveness. Even though many researchers think that the level of concentration affects the conditions of business firms, including profitability, few papers tried to study the effect of concentration on profitability in the Korean food processing industry. The purpose of this paper is to analyze the effect of concentration on the profitability of food processing business firms. This research conducts the econometric analysis with CR4, Herfindahl index, and index of profitability (ROA, ROE, Gross Margin, Operating Margin). The results show that higher concentration increases or decreases the level of profitability in Korean food processing business firms, which presents that the Korean government needs to concern the level of concentration in the food processing industry for its policy making.
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