Comparative Advantages in Estimating Markups
AbstractWe compare two methods for estimating a markup: Roeger (1995) on the one hand, and the structural approach of Appelbaum (1982) and Bresnahan (1982) on the other. Toeger estimates the average Lerner index. Furthermore, he uses the assumption of a constant markup as a substitute for data on the level of capital cost, which he takes to be unobservable. We discover an anomaly for Roeger's method and propose an alternative way to estimate it. The structural approach is theoretically superior: it aims at estimating marginal instead of average cost, while it includes more competition-related parameters. Our empirical results indicate that this approach is very sensitive to changes in specification.
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Bibliographic InfoPaper provided by NEUHUYS - RESEARCH INSTITUTE FOR SMALL AND MEDIUM in its series Papers with number 0003/e.
Length: 72 pages
Date of creation: 2000
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Postal: RESEARCH INSTITUTE FOR SMALL AND MEDIUM-SIZED BUSINESS IN THE NETHERLANDS, NEUHUYS.
COSTS ; MARKET STRUCTURE ; INDUSTRY;
Other versions of this item:
- D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
- L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
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