Publications in peer-refereed journals
From Symbiosis to Independence: Investigating Changes in the Relationship Between General Practitioners’ Presence and Pharmacies’ Market Size in Slovakia (in Health Policy)
Using the Slovak pharmacy retail market case, this study examines the evolving interdependency between general practitioners (GPs) and pharmacies. Traditionally, they have operated symbiotically, with pharmacy revenues heavily reliant on prescriptions. However, the development of the market structures of these providers after the liberalization of the pharmacy retail market in 2005 raises a question about the stability of this relationship. By analyzing entry thresholds as a measure of the market size required for pharmacies to cover their entry costs, the study reveals that the dependency of pharmacies on the presence of GPs has diminished over time. In the initial year following the liberalization, the presence of a GP decreased the market size sufficient to cover entry costs for the first pharmacy by about 83% compared to a market without a GP. However, in 2019, this effect decreased to approximately 65%. This could imply worsened coverage of pharmaceutical services in small and rural areas with GPs as the entry decision of pharmacies is less elastic towards their presence.
Entry and competition in the European bike-sharing industry (with Hana Fitzová, Vilém Pařil, and Milan Fila in Transport Policy)
Assessments of the bike-sharing industry traditionally focus on its effects on other markets, municipalities, or general well-being. This paper deviates from this on how the market is organised. Using information on the aggregate number of firms in cities and greater cities across Europe, we found non-proportional changes in market size with respect to changes in market structure. This is crucial information inferring changes in profits, costs, or degree of product differentiation. To distinguish between these three sources, we utilised additional firm-level data on capacity and type of service provided. Our results suggest that the non-proportional increase in market size after an entry is most likely associated with increased intensity of competition and new forms of offered services, i.e. product differentiation. We did not find evidence that newcomers have been entering with substantially larger capacities per capita compared to incumbents. From a policy perspective, entry into the bike-sharing industry has benefited consumers through market expansion and caused a potential decrease in profits.
Efficiency effects of mergers: Harmonising merged production (with Mikuláš Luptáčik and Daniel Dujava in Journal of Operational Research Society)
The model of potential gains from mergers provides a useful decomposition into technical efficiency, returns to scale, and the harmony effect. While technical efficiency and returns to scale have been well elaborated, interpretation of the harmony effect remains open. We provide analytic insight into the aforementioned decomposition. We express the harmony effect as a function of the relative difference between the structures of the firms involved and the relative difference in their sizes. These factors can play an important role and, in some cases, can even outweigh a potentially negative merger outcome due to decreasing returns to scale. Furthermore, we show that the sign of the harmony effect is dependent not on the specific form of the production function but rather on its shape. In the case of a concave production function, the harmony effect contributes in a positive sense to the gains from mergers. \textcolor{blue}{Incorporating information on given input prices, the harmony effect is described as the product of technical, price, and allocative efficiency. The potential effects of the technical-physical based harmony effect are illustrated for the Slovak hospital sector.} This application provides a detailed look at the reallocation process.
Competition in long distance transport: Impacts on prices, frequencies, and demand in the Czech Republic (with Hana Fitzová, Vilém Pařil and Marek Kasa in Research in Transportation Business & Management)
This article analyses the effect of different entry regulations on company conduct and traveller behaviour. The paper presents a comprehensive case study of three railway markets with significantly different entry policies using data on prices and frequencies together with a survey conducted to obtain revealed preferences. The study employs data from the three main lines in the Czech Republic. The two open-access markets tended to provide significantly higher connection frequencies than the line with regulated entry did. Surprisingly, low price variation across the rail and bus markets
suggests low monopoly power for the monopolised incumbent and its uniform price strategy across markets with different entry regulations. On the other hand, high price sensitivity among travellers confirms the importance of intramodal competition.
How Transport Policy Shapes Commuting Patterns: The Case of the Bratislava Sub-urban Area (with Daniel Dujava in Case Studies on Transport Policy)
We analyse the commuting patterns in Bratislava’s fast-growing sub-urban region with sub-optimally developed infrastructure. A standardized discrete choice model is used to estimate the demand for individual car transport as well as public buses and trains and to obtain corresponding elasticities with respect to travel costs, times and income. We find a low rate of substitution between the available modes of transport. The direct price elasticity for public modes of transport is in accordance with the often-quoted rule of thumb of −0.3. Negative income elasticities of the demand for buses and trains, together with a low direct price elasticity for car transport, can be hard to overcome when looking for a solution for the current traffic problems in the region. We use modelled demand to predict the effects of two recent draft policies – the new parking system in Bratislava city and the construction of highway D4R7. In the case of the first policy, we expect a massive reduction in car use due to increased costs for car commuters. On the other hand, the new highway would only have a limited impact on mode choice and could reduce the number of train commuters.
Using the DEA method to optimize the number of beds in the Slovak hospital sector (with Erika Majzlíková in Ekonomický časopis, 67, 2019, č. 7, s. 725 – 742)
The Slovak hospital sector is characterized by overcapacity in the total number of beds due to inherited infrastructure. In this paper, we use the Data Envelopment Analysis technique to optimize the number of beds for 62 Slovak hospitals. Models with variable and constant returns to scale are used. Moreover, our models account for the quality of hospital care as well as the long-standing problem of a low number of medical staff. Based on the calculated technical efficiency, the number of beds could be decreased by 20% to 33% while keeping other variables constant at current levels. A reduction of up to 10% in the total number of beds would be satisfactory in roughly 30% of all hospitals.
Analysis of the Impact of the CETA Trade Agreement between the EU and Canada on the Slovak Economy (with Gabriela Dovaľová, Boris Hošoff, Martin Lábaj and Erika Majzlíková in Ekonomický časopis, 66, 2018, č. 8, s. 771 – 797)
This paper is focused on the impact arising from the conclusion of the Comprehensive Economic and Trade Agreement (CETA) between the European Union and Canada on the Slovak economy, with an emphasis on the automotive industry, machinery industry and electronics industry. Its aim is to estimate the direct as well as indirect effects generated by changes in international trade on Slovakia’s value-added, exports and employment, using the multi-regional input-output model. Based on different variants of development, it is expected that the average impact of CETA on the Slovak economy, as a result of the removal of the tariff barriers, will amount to 0.013% GDP, while the impact on job creation was estimated at 0.012% of the total employment. Removing the tariff barriers should lead to an increase in exports to Canada on average by 8%, in the event of a strong reaction to a price drop even by 18%.
Development trends and the importance of paper industry for the Slovak economy (with Martin Lábaj, Mikuláš Luptáčik, Karol Morvay and Erika Majzlíková in Ekonomický časopis, 66, 2018, č. 9, s. 861 – 887)
In this paper, we examine the dynamics of the paper industry, its productivity, and the capital-labour ratio, as well as the connections between the development of employment, labour costs and its competitiveness. An extended Leontief model with induced effects is used. We show that the Slovak paper industry grew faster than in most of the European countries. However, compared to the manufacturing sector or the whole Slovak economy, it experienced slower growth. The final demand for the products of the paper industry generated 2013 more than 18 thousand jobs and more than EUR 650 million of value added. The final use of paper for EUR 1 million generates value added in the Slovak economy directly and indirectly for EUR 630 thousand. One employee in the production of paper generates 3.6 jobs in the remaining industries.
Publications in progress and working papers
Merger Remedies in Benchmarking-Based Regulation (with Peter Bogetoft)
This paper contributes to the literature on mergers and benchmarking-based regulation. Revenue cap schemes based on benchmarking can provide strong incentives for cost reduction, especially when there is a large number of low-cost peers available. Mergers can also lead to cost savings through knowledge sharing and economies of scale and scope. However, mergers may reduce the number of peers, thereby diminishing the competitive pressure generated by the benchmarking model. Therefore, regulators must balance the cost savings from mergers against the potential reduction in competitive pressure from a smaller peer group.
We explore this trade-off by examining potential remedies regulators might implement in the context of a merger. The direct gains from a merger are often smaller compared with the broader impact on all firms indirectly affected by the merger. Consequently, achieving total cost reductions for the industry through mergers is challenging when both direct and indirect effects are considered. To gain more insight, we study three alternative remedies: naive, separated, and aggressive. These approaches differ in the cost targets imposed on newly merged firms and in the use of pre- and postmerger information in the benchmarking model for nonmerged firms. The impact on total costs to consumers depends on the details of the proposed merger and the assumed returns to scale. Under assumptions of constant, increasing or additive returns to scale, the aggressive remedy is the least costly. However, even in such cases, consumers may still be better off without the merger
Chain Formation and Consumer Welfare on the Retail Pharmacy Market (with Jakub Červený and Biliana Yontcheva)
The present paper evaluates the effect of deregulated ownership and horizontal integration on the retail pharmacy market. Using data on the full population of reimbursed prescriptions in Slovakia in 2017, we examine whether outlets of pharmacy chains perform better than their independent counterparts in terms of consumer preferences and operating costs. Our preliminary findings indicate that consumers perceive pharmacy chains as having higher quality on average than independent outlets, although there is substantial heterogeneity in the effects, both across chain brands and across consumer types. In addition, we find that chains perform better in terms of average labour productivity. After accounting for differences in expected demand and labour costs, we do not find substantial differences in the fixed cost of entry.
More on my research can be found through google.scholar or researchgate.