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Lerner Index. Estimation and the Impact of its Market Structure Determinants

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  • Alejandro Castañeda Sabido

    ()
    (El Colegio de México)

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    Abstract

    Using the reasoning that assumes that a pro-cyclical Solow residual is an indication of the presence of market power, the paper estimates the Lerner index. At the same time in which we estimate the Lerner index, we measure the impact of industry structure variables (concentration and imports) on this index. Because we have panel data, we also allow for a change in the impact of these variables across time. For the whole manufacturing sector, we find that concentration and imports have a differing impact on the Lerner index across the business cycle. We find evidence that shows that the Lerner index behaves anticyclically. And we also make the analysis by type of good (durables and non-durables) and find differing impacts of concentration and imports by type of good.

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    File URL: http://www.economiamexicana.cide.edu/num_anteriores/XV-2/ALEJANDRO_CASTANEDA.pdf
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    Bibliographic Info

    Article provided by in its journal Economia Mexicana NUEVA EPOCA.

    Volume (Year): XV (2006)
    Issue (Month): 2 (July-December)
    Pages: 165-197

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    Handle: RePEc:emc:ecomex:v:15:y:2006:i:2:p:165-197

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    Related research

    Keywords: Lerner index estimation; concentration; import-penetration; pro-cyclical Solow residual;

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    1. Kyle Bagwell, 2004. "Collusion and Price Rigidity," Theory workshop papers, UCLA Department of Economics 658612000000000081, UCLA Department of Economics.
    2. Charles R. Nelson & Richard Startz, 1988. "Some Further Results on the Exact Small Sample Properties of the Instrumental Variable Estimator," NBER Technical Working Papers, National Bureau of Economic Research, Inc 0068, National Bureau of Economic Research, Inc.
    3. Robert E. Hall, 1986. "The Relation Between Price and Marginal Cost in U.S. Industry," NBER Working Papers 1785, National Bureau of Economic Research, Inc.
    4. John Shea, 1996. "Instrument Relevance in Multivariate Linear Models: A Simple Measure," NBER Technical Working Papers, National Bureau of Economic Research, Inc 0193, National Bureau of Economic Research, Inc.
    5. Bils, Mark, 1987. "The Cyclical Behavior of Marginal Cost and Price," American Economic Review, American Economic Association, American Economic Association, vol. 77(5), pages 838-55, December.
    6. Green, Edward J. & Porter, Robert H., 1982. "Noncooperative Collusion Under Imperfect Price Information," Working Papers, California Institute of Technology, Division of the Humanities and Social Sciences 367, California Institute of Technology, Division of the Humanities and Social Sciences.
    7. Domowitz, Ian & Hubbard, R Glenn & Petersen, Bruce C, 1986. "The Intertemporal Stability of the Concentration-Margins Relationship," Journal of Industrial Economics, Wiley Blackwell, Wiley Blackwell, vol. 35(1), pages 13-34, September.
    8. Pugel, Thomas A, 1980. "Foreign Trade and US Market Performance," Journal of Industrial Economics, Wiley Blackwell, Wiley Blackwell, vol. 29(2), pages 119-29, December.
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