Market Structure and Performance of The Wheat Flour Industry in Indonesia

Abstract

This study aims to determine the market structure and performance of the wheat flour industry in Indonesia. Using micro data for Large and Medium Industries (IBS) from year 2010 to 2013, with ISIC code 10617, which is the Wheat Flour Industry. We used descriptive statistics and regression and also structure, conduct, and performance models for the data analysis. The result analysis showed that the wheat flour industry market structure from year to year tends to lead to a strict oligopoly structure, where there is one large dominant company. The dominant market structure in the wheat flour industry causes market behavior that occured in this industry tends to follow large company. This is called the band wagon effect where small companies will follow the steps taken by large companies. This will encourage collusive price leadership. The market performance of the wheat flour industry is still considered inefficient, as indicated by the high CR4 and HHI values in contrast with the low PCM