Profitability, Efficiency, and Market Structure in the Meat and Milk Processing Industry: Evidence from Central Europe

Abstract

This study aims to investigate the impact of the market structure and efficiency on firm performance in the meat and milk processing industry in Poland, Czechia, and Slovakia. Using stochastic frontier analysis and a profitability regression model applied to data from 2015 to 2021, the results indicate no evidence of collusive behavior in the examined markets. Instead, profitability is significantly driven by efficiency, supporting the hypothesis of an efficient market structure. Companies with higher market shares do not exploit their market power to set higher prices and increase profitability. The findings highlight efficiency as a critical determinant of performance in unconcentrated markets, offering valuable insights for stakeholders in the food processing industry and policymakers.