CONCENTRATION ON TELECOMMUNICATIONS MARKET IN BiH

Abstract

Measures of economic policy in the field of protection against excessive market concentration is one of the segments in the broader field of protection of market competition, while the measures of the protection of competition are one of the measures of overall economic policy of a country. The reason for the existence and implementation of measures in the field of market concentration as one of the segments of the competition policy is that imperfect market structures, generally speaking, lead to decline of social welfare. The telecommunications market in BiH is dominated by three telecom operators with significant market power. However, the telecom market in BiH is unique for geographical market segmentation, where the individual segments are dominated by single telecom operators depending on the ethnic structure of population of a given market segment. Hereafter, we analyzed the development of the telecommunications market in BiH and pointed to the current situation of this market segment. To measure the concentration, we used the two most commonly used measures of the Herfindahl-Hirschman Index of concentration (HHI) and the Concentration Ratio (CR). The results directly indicate the existence of classical oligopoly in the telecommunications market in BiH. However, for objective reasons, the analysis was performed using the variables that come from outside (supply, share in supply and total revenues), ignoring the internal variables of enterprises (average and marginal costs).