REV.CHIM.(Bucharest)♦68♦No.3 ♦2018 http://www.revistadechimie.ro 697 The Impact of the Market Concentration Ratio on the Productivity Romanian chemical industry MARIAN SIMINICA, SILVIU VALENTIN CARSTINA*, DANIEL CIRCIUMARU, LAVINIA NETOIU University of Craiova, Faculty of Economics and Business Administration, 13 A.I. Cuza Str., 200396, Craiova, Romania In this article we enlarge upon the market concentration ratio of all the companies in the chemical industry (divided into 16 areas of activity, according to the NACE code: The National Classification of Economic Activities), but also of the most important 50 companies in this sector, depending on the turnover. Throughout the paper, we deal with the correlation between the market concentration and profitability, determined by taking into consideration the net profit, ROA, ROE and the profit margin. The research results point to the existence of a weak correlation between the concentration ratio as an independent variable, and ROA and the profit margin as dependent variables. However, the correlation is direct and strong if connected to the net profit and ROE. For these two variables, there are patters of linear regression that have been brought together. Keywords: market structure, Gini-Struck coefficient, Herfindhal-Hirschman index, Theil index, profitability *email:silviu.carstina@yahoo.com; Phone: 0725591791 The companies’ profitability is influenced by numerous factors. The researchers who have dealt with this problem, have identified numerous factors, both internal, as well as external, and have come up with an explanation regarding the mechanisms used to pass on this influence. One of the factors is the market concentration ratio. Although the studies that have been conducted so far have reached different conclusions, one thing is for sure: the market concentration influences the companies’ profitability, more or less, even though the conveyance mechanism is not always known. Starting from these premises, we intend to analyze the market concentration ratio of the Romanian chemical products and the way it affects the companies’ profitability. The Romanian chemical industry has traditionally had a considerable impact on the GDP. But after 1990, the lack of investments in a new technologization had led to the closing of a lot of companies which were no longer the top companies they once were because of the high amounts of natural gases consumed, that have a considerable proportion in the production costs [1]. The consequence was the explosion of the imports of petrochemical and chemical products (approximately 8 billion euros each year), whereas the exports raise only 2 billion euros per year. The recent changes from the chemical industry are the result of the National Strategy for the Sustainable Development [2], whose main purposes are to reduce the emission of chemical pollutants. Nowadays, there are approximately 1000 companies active in the chemical industry. In this industry there are greater or smaller operators, determining a certain degree of market concentration. Market competition and the companies’ size are susceptible to influence the profitability of the area of activity and the companies’ market behaviour. For the purpose of this research paper, the companies have been divided into 16 areas of activity that correspond to the 16 NACE codes and cumulate a turnover in the amount of 9,536.6 mil. lei in 2016. The first aim of this paper was determining the concentration ratio of the 16 groups of companies by taking into account the turnover and the profit. The second aim was analyzing the concentration ratio of the first 50 companies belonging to this industry (taking into consideration the turnover) and the correlation between this issue and the companies’ profitability. Joe S. Bain was among the first to study the impact of markets on the business performance. He analysed the market concentration in relation to market power and profitability. Bain developed the structure-conduct- performance (SCP) paradigm of Edward Chamberlin and Joan Robinson, by which he explained the causal relationship between market environment, market structure, business conduct and its performance. Bain’s study and findings became a reference for many years, even later his theory (part of Industrial Organizations) has been criticised and other paradigms occurred [3]. F. Leon in Measuring competition in banking: A critical review of methods analysed the factors of competition in the banking industry. He reviewed the main theories, from the structural approach developed by Bain till non- structural approaches later developed. The non-structural methods represent a second major stream in analysing the competition, also called New Empirical Industrial Organization. Among the most important measures developed with this stream are the Lerner index, the conjectural variation model, the Panzar-Rosse model and the Boone indicator [4]. Stanciulescu G. C. and Molnar E. I. start from the industrial economic theory and use SCP paradigm and game theory to analyse the price strategy of tourism companies on a competitive market. The two authors show how the decision of a company to advertise influences a competitor’s decision to advertise and what the impact on the sales is [5]. Abraao Luis Silva makes a complex study on Chamberlin’s works, emphasizing the main specific features of his paradigm, the influences of Marshall on his theory, the strong and weak points of his paradigm, and the link with J. Robinson’s findings. Silva performs his research starting with the types of competition on the market, the relationship between competitors, on one hand, and the relationship between companies and consumers,