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.
Download InfoTo our knowledge, this item is not available for download. To find whether it is available, there are three options:
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.
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
Date of revision:
Contact details of provider:
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
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Klette, Tor Jakob, 1999.
"Market Power, Scale Economies and Productivity: Estimates from a Panel of Establishment Data,"
Journal of Industrial Economics,
Wiley Blackwell, vol. 47(4), pages 451-76, December.
- Klette, T.J., 1998. "Market Power, Scale Economies and Productivity: Estimates from a Panel of Establishment Data," Memorandum 15/1998, Oslo University, Department of Economics.
- Stephanie Schmitt-Grohe, 1995.
"Comparing four models of aggregate fluctuations due to self-fulfilling expectations,"
Finance and Economics Discussion Series
95-17, Board of Governors of the Federal Reserve System (U.S.).
- Schmitt-Grohe, Stephanie, 1997. "Comparing Four Models of Aggregate Fluctuations due to Self-Fulfilling Expectations," Journal of Economic Theory, Elsevier, vol. 72(1), pages 96-147, January.
- W. Erwin Diewert & T.J. Wales, 1989.
"Flexible Functional Forms and Global Curvature Conditions,"
NBER Technical Working Papers
0040, National Bureau of Economic Research, Inc.
- Diewert, Walter E & Wales, Terence J, 1987. "Flexible Functional Forms and Global Curvature Conditions," Econometrica, Econometric Society, vol. 55(1), pages 43-68, January.
- Robert E. Hall, 1986. "Market Structure and Macroeconomic Fluctuations," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 17(2), pages 285-338.
- Ashenfelter, Orley & Sullivan, Daniel, 1987. "Nonparametric Tests of Market Structure: An Application to the Cigarette Industry," Journal of Industrial Economics, Wiley Blackwell, vol. 35(4), pages 483-98, June.
- Frank Hindriks, 1999. "Non-competitive rents in Dutch manufacturing," Scales Research Reports H199905, EIM Business and Policy Research.
- Roeger, Werner, 1995. "Can Imperfect Competition Explain the Difference between Primal and Dual Productivity Measures? Estimates for U.S. Manufacturing," Journal of Political Economy, University of Chicago Press, vol. 103(2), pages 316-30, April.
- Ian Domowitz & R. Glenn Hubbard & Bruce C. Petersen, 1986. "Business Cycles and the Relationship Between Concentration and Price-Cost Margins," RAND Journal of Economics, The RAND Corporation, vol. 17(1), pages 1-17, Spring.
- Morrison, Catherine J, 1988. "Quasi-Fixed Inputs in U.S. and Japanese Manufacturing: A Generalized Leontief Restricted Cost Function Approach," The Review of Economics and Statistics, MIT Press, vol. 70(2), pages 275-87, May.
- Schmalensee, Richard, 1989.
"Inter-industry studies of structure and performance,"
Handbook of Industrial Organization,
in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 2, chapter 16, pages 951-1009
- Schmalensee, Richard., 1987. "Inter-industry studies of structure and performance," Working papers 1874-87., Massachusetts Institute of Technology (MIT), Sloan School of Management.
- Haskel, Jonathan & Martin, Christopher & Small, Ian, 1995. "Price, Marginal Cost and the Business Cycle," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 57(1), pages 25-41, February.
- Robert E. Hall, 1988.
"The Relation Between Price and Marginal Cost in U.S. Industry,"
NBER Working Papers
1785, National Bureau of Economic Research, Inc.
- Hall, Robert E, 1988. "The Relation between Price and Marginal Cost in U.S. Industry," Journal of Political Economy, University of Chicago Press, vol. 96(5), pages 921-47, October.
- Shaffer, Sherrill, 1993.
"A Test of Competition in Canadian Banking,"
Journal of Money, Credit and Banking,
Blackwell Publishing, vol. 25(1), pages 49-61, February.
- Sanjib Bhuyan & Rigoberto A. Lopez, 1997. "Oligopoly Power in the Food and Tobacco Industries," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(3), pages 1035-1043.
- Matthew D. Shapiro, 1987.
"Measuring Market Power in U.S. Industry,"
Cowles Foundation Discussion Papers
828, Cowles Foundation for Research in Economics, Yale University.
- Panzar, John C & Rosse, James N, 1987. "Testing for "Monopoly" Equilibrium," Journal of Industrial Economics, Wiley Blackwell, vol. 35(4), pages 443-56, June.
- Goldberg, Pinelopi Koujianou, 1995. "Product Differentiation and Oligopoly in International Markets: The Case of the U.S. Automobile Industry," Econometrica, Econometric Society, vol. 63(4), pages 891-951, July.
- repec:cdl:agrebk:677104 is not listed on IDEAS
- Appelbaum, Elie, 1982. "The estimation of the degree of oligopoly power," Journal of Econometrics, Elsevier, vol. 19(2-3), pages 287-299, August.
- Corts, Kenneth S., 1998. "Conduct parameters and the measurement of market power," Journal of Econometrics, Elsevier, vol. 88(2), pages 227-250, November.
- Berry, Steven & Levinsohn, James & Pakes, Ariel, 1995. "Automobile Prices in Market Equilibrium," Econometrica, Econometric Society, vol. 63(4), pages 841-90, July.
- Nevo, Aviv, 1998. "Identification of the oligopoly solution concept in a differentiated-products industry," Economics Letters, Elsevier, vol. 59(3), pages 391-395, June.
- Margarida De Mello & Antonio Brandao, 1999. "Measuring the Market Power of the Portuguese Milk Industry," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 6(2), pages 209-222.
- Henry Nieuwenhuijsen & André van Stel & Marcel Lever, 1999. "Degree of collusion in construction, The," Scales Research Reports H199810, EIM Business and Policy Research.
- Bresnahan, Timothy F., 1982. "The oligopoly solution concept is identified," Economics Letters, Elsevier, vol. 10(1-2), pages 87-92.
- Clement G. Krouse, 1998. "Measuring Monopoly Power, Revisited," Review of Industrial Organization, Springer, vol. 13(6), pages 687-696, December.
- Kadiyali, Vrinda & Vilcassim, Naufel & Chintagunta, Pradeep, 1998. "Product line extensions and competitive market interactions: An empirical analysis," Journal of Econometrics, Elsevier, vol. 89(1-2), pages 339-363, November.
- Sullivan, Daniel, 1985. "Testing Hypotheses about Firm Behavior in the Cigarette Industry," Journal of Political Economy, University of Chicago Press, vol. 93(3), pages 586-98, June.
- Hervé BOULHOL, 2008.
"The Upward Bias of Markups Estimated from the Price-Based Methodology,"
Annales d'Economie et de Statistique,
ENSAE, issue 89, pages 131-156.
- Hervé Boulhol, 2005. "The upward bias of markups estimated from the price-based methodology," Cahiers de la Maison des Sciences Economiques bla05055, Université Panthéon-Sorbonne (Paris 1).
- Hervé Boulhol, 2004. "Capital quasi-fixity and the estimation of markups," Post-Print halshs-00193298, HAL.
- Hervé Boulhol, 2004. "Capital quasi-fixity and the estimation of markups," Cahiers de la Maison des Sciences Economiques bla05005, Université Panthéon-Sorbonne (Paris 1).
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Thomas Krichel).
If references are entirely missing, you can add them using this form.