The Portuguese tomato processing sector: market structure, concentration and firm behaviour
New Medit, vol 7, n.2, (June 2008), pp. 23-30
Jel classification: Q130, L110, L660
The purpose of this paper is to study the evolution and the structure of the Portuguese tomato processing industry. We intend to focus on the dynamics, the strategic behaviour and the structural changes that occurred in the Portuguese tomato industry throughout the period 1990-2005. An overview of the world and national production and trade in the last two decades is followed by a descriptive analysis of the market structure and development. This paper examines the concentration effect on the firms’ performance and strategy. The result indicates that, from a quantitative point of view, the market concentration in tomato processing industry is moderate but the concentration level has increased over the last few years. In contrast, the seller concentration has always been higher. The CR4 and HHI concentration indices measure values between 75% and 91% and between 0.20 and 0.30 respectively. The market power measured by approximation to the Lerner index indicates negative values resulting from the negative net income. No linkage was found between the market share and R&D expenses. Marketing costs are concentrated in the four biggest companies but the concentration increase did not change the evolution of marketing costs and profits. The use of market share in advertising or in research and development was not observed.
tomato processing industry, concentration, firm strategy, market power, competitiveness