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Methodological Extensions Of First-Order Adjustment Models: An Application To U.S. Industries

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Author Info
SUNGHAN JO
Abstract

This paper empirically tests two industrial-organization models with a sample of 182 U.S. industries, from 1963 to 1967. The models extend standard models and integrate them with dynamics associated with the "persistence of profits” methodologies. We extend it by replacing the traditional cross-section profit equation with a profit-adjustment equation for U.S. industrial data. Out study measures the speed of adjustment of profits and explicitly models steady-state profits, in addition to the speed of structural adjustment and steady-state market structure. We find that the structural-adjustment speed is slower than the profit-adjustment speed and that nonzero economic profits tend to be quite persistent.

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Article provided by Korean International Economic Association in its journal International Economic Journal.

Volume (Year): 14 (2000)
Issue (Month): 2 (June)
Pages: 85-111
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Handle: RePEc:taf:intecj:v:14:y:2000:i:2:p:85-111

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  1. Masson, Robert Tempest, 1977. ""Concentration and Profits" by Stanley I. Ornstein: A Comment," Journal of Business, University of Chicago Press, vol. 50(4), pages 529-35, October. [Downloadable!] (restricted)
  2. Masson, Robert T & Shaanan, Joseph, 1982. "Stochastic-Dynamic Limiting Pricing: An Empirical Test," The Review of Economics and Statistics, MIT Press, vol. 64(3), pages 413-22, August. [Downloadable!] (restricted)
  3. Geroski, P. A. & Masson, R. T., 1987. "Dynamic market models in industrial organization," International Journal of Industrial Organization, Elsevier, vol. 5(1), pages 1-13, March. [Downloadable!] (restricted)
  4. Mueller, Dennis C, 1977. "The Persistence of Profits above the Norm," Economica, London School of Economics and Political Science, vol. 44(176), pages 369-80, November. [Downloadable!] (restricted)
  5. Geroski, P. A. & Masson, R. T. & Shaanan, S., 1987. "The dynamics of market structure," International Journal of Industrial Organization, Elsevier, vol. 5(1), pages 93-100, March. [Downloadable!] (restricted)
  6. Geroski, P. A., 1982. "Simultaneous equations models of the structure-performance paradigm," European Economic Review, Elsevier, vol. 19(1), pages 145-158. [Downloadable!] (restricted)
  7. Hannan, Timothy H & Berger, Allen N, 1991. "The Rigidity of Prices: Evidence from the Banking Industry," American Economic Review, American Economic Association, vol. 81(4), pages 938-45, September. [Downloadable!] (restricted)
  8. Levy, David, 1987. "The speed of the invisible hand," International Journal of Industrial Organization, Elsevier, vol. 5(1), pages 79-92, March. [Downloadable!] (restricted)
  9. Caves, Richard E & Khalilzadeh-Shirazi, J & Porter, M E, 1975. "Scale Economies in Statistical Analyses of Market Power," The Review of Economics and Statistics, MIT Press, vol. 57(2), pages 133-40, May. [Downloadable!] (restricted)
  10. David Neumark & Steven A. Sharpe, 1989. "Market structure and the nature of price rigidity: evidence from the market for consumer deposits," Finance and Economics Discussion Series 52, Board of Governors of the Federal Reserve System (U.S.).
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  11. Geroski, Paul A & Jacquemin, Alexis, 1988. "The Persistence of Profits: A European Comparison," Economic Journal, Royal Economic Society, vol. 98(391), pages 375-89, June. [Downloadable!] (restricted)
  12. Lustgarten, Steven H, 1975. "The Impact of Buyer Concentration in Manufacturing Industries," The Review of Economics and Statistics, MIT Press, vol. 57(2), pages 125-32, May. [Downloadable!] (restricted)
  13. Masson, Robert & Shaanan, Joseph, 1987. "Optimal oligopoly pricing and the threat of entry: Canadian evidence," International Journal of Industrial Organization, Elsevier, vol. 5(3), pages 323-339. [Downloadable!] (restricted)
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This page was last updated on 2009-12-10.

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