IS BUSINESS ENVIRONMENT IN PAKISTAN COMPETITIVE OR HIGHLY CONCENTRATED IN THE LIGHT OF HHI INDEX

Abstract

Major aim of this study is to measure the competition among industries in Pakistan and to find out whether the business environment in Pakistan is competitive or highly concentrated/moderately concentrated. The study involves use of market shares of both financial and non-financial sector in Pakistan for the year 2013. In this paper, we measure the competitiveness in any particular industry by using microeconomic tool of Herfindahl-Hirschman Index (HHI). It is important to have competitiveness among industrial units, as we know that consumer is benefited from competing firm. On the one hand price of product is comparatively lower and quality of product improves. The analysis and comparative result from calculation of HHI, it is clearly suggest that business environment in Pakistan is highly concentrated. All the industries of Pakistan need a lot of efforts to make business competitive. The outcomes of research might help out the policy maker that which industry is competitive or concentrated. It might also help the regulatory authority (CCP) to make sure that business and companies in Pakistan compete fairly with each other.