CONCENTRATION ON TELECOMMUNICATIONS MARKET IN BiH

Abstract

Measures of economic policy in thefield of protection against excessive marketconcentration is one of the segments in the broaderfield of protection of market competition, while themeasures of the protection of competition are oneof the measures of overall economic policy of acountry. The reason for the existence andimplementation of measures in the field of marketconcentration as one of the segments of thecompetition policy is that imperfect marketstructures, generally speaking, lead to decline ofsocial welfare. The telecommunications market inBiH is dominated by three telecom operators withsignificant market power. However, the telecommarket in BiH is unique for geographical marketsegmentation, where the individual segments aredominated by single telecom operators dependingon the ethnic structure of population of a givenmarket segment. Hereafter, we analyzed thedevelopment of the telecommunications market inBiH and pointed to the current situation of thismarket segment. To measure the concentration, weused the two most commonly used measures of theHerfindahl-Hirschman Index of concentration(HHI) and the Concentration Ratio (CR). Theresults directly indicate the existence of classicaloligopoly in the telecommunications market in BiH.However, for objective reasons, the analysis wasperformed using the variables that come fromoutside (supply, share in supply and totalrevenues), ignoring the internal variables ofenterprises (average and marginal costs).

Keywords

• measurement of the concentration
• the Herfindahl-Hirschman index of concentration (HHI)
• Concentration Ratio (CR)
• oligopoly.