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Heterogeneous Decision-Making and Market Power

Author

Listed:
  • Kutlu, Levent

    (University of Texas Rio Grande Valley)

  • Sickles, Robin

    (Rice University)

  • Tsionas, Mike G.

Abstract

We provide a structural model wherein the decision-makers are payoff maximizers in a general game theoretic setting in which heterogeneity is formally factored into the decisions of the players. The decision-makers are allowed to have different types; and parameters are the same within each type but they differ across types. Using insights from our treatment of heterogeneous and strategic decision-making, we estimate the conducts (market powers) of Eurozone banks for years 2002-2015. We find that Eurozone banks are fairly competitive. However, banks in peripheral countries have more market power compared to the core of Eurozone.

Suggested Citation

  • Kutlu, Levent & Sickles, Robin & Tsionas, Mike G., 2019. "Heterogeneous Decision-Making and Market Power," Working Papers 19-008, Rice University, Department of Economics.
    • Handle: RePEc:ecl:riceco:19-008
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    More about this item

    JEL classification:

    • C11 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Bayesian Analysis: General
    • C18 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Methodolical Issues: General
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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