Market concentration in an oil economy: firm-level evidence from Kazakhstan
DOI:
https://doi.org/10.31489/bbr.2026/1331Keywords:
market concentration, Herfindahl–Hirschman index, markups, business dynamism, superstar firms, KazakhstanAbstract
Market concentration is widely used to screen for market power. If concentration reflects market power, more concentrated industries should earn higher markups, and their leading firms should persist while innovating less. We examine whether measured concentration reflects market power in Kazakhstan, an economy with a large oil sector and extensive state involvement in markets, using administrative data on medium and large enterprises in 67 industries for 2016–2023. Aggregate concentration is moderate and changes little, and almost all of its short-run movement comes from oil and gas. Several of the largest changes in industry concentration come from firms entering or leaving the reporting data. Markups do not rise with concentration, either across industries or within industries over time. State enterprises, which are more prevalent in concentrated industries, report lower markups than private firms. The largest firms in each industry tend to persist, but persistent leaders report innovation activity more often than displaced ones. These results identify features of Kazakhstan that complicate inference of market power from measured concentration at both the aggregate and industry levels, and the greater innovation of persistent leaders similarly complicates inferring market power from persistence.
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