Competitiveness of the Oil Market and Profitability of the Oil Industry in Federation of Bosnia and Herzegovina

This research examines different hypotheses that explain generic profitability within the framework of the hypothesis of efficiency, representing its main contribution to the use of direct measurement of efficiency through profitability and market competition. This measurement is achieved using pioneering techniques using a model in the scientific work Profitability, market structure and efficiency by M. Gumbau and J. Maudos (2000). Evidence obtained enables us not to reject the hypothesis about the profitability of oil producers in B&H, to determine whether the concentration positively affects profitability, and further, the results in most cases, enabled us to reject a clean hypothesis of efficiency since, although efficiency contributes positively to explaining the differences in profitability, the market share, which encompasses the effect of market power, also has a positive impact on it. So, from results obtained we do not reject the hypothesis of profitability so that we find positive relationship between profitability and the market share of Oil industry in Federation of Bosnia and Herzegovina.