Abstract:
This research attempts to examine the effect of foreign direct investment and profitability
(price cost margins) on market concentration in 26 CEE and CIS countries. The hypothesis
whether FDI and profitability make market concentration increase or decrease is tested using
instrumental variables (IV) methods (business environment indicators are treated as instruments)
in order to ensure that the possible endogeneity problem between FDI and concentration is elimi
nated.
