IDEAS home Printed from https://ideas.repec.org/p/onb/oenbwp/36.html
   My bibliography  Save this paper

Heterogeneities within industries and structure-performance models

Author

Abstract

This paper tests whether the results from standard structure-conduct-performance [SCP] models estimated at the industry level are sensitive to the degree of heterogeneity of the firms in the industries. Industries are separated into homogeneous and heterogeneous categories depending on whether the profit rates of firms within an industry converge on a common value or not. In "homogeneous" industries we find that both the long-run projected returns on assets for the industries and Bureau of Census price-cost-margins are well explained by variables usually included in SCP models, as in particular industry concentration. In contrast, few if any of the usual SCP-model variables are statistically significant in the regressions for heterogeneous industries.

Suggested Citation

  • Dennis Mueller & Burkhard Raunig, 1998. "Heterogeneities within industries and structure-performance models," Working Papers 36, Oesterreichische Nationalbank (Austrian Central Bank).
    • Handle: RePEc:onb:oenbwp:36
    as

    Download full text from publisher

    File URL: https://www.oenb.at/dam/jcr:194946a6-b06f-4a06-8df7-13a045ddd621/wp36_tcm16-6108.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Bloch, H., 1992. "Sample-Selection Procedures for Estimating the Relationship Between Concentration and profitability from Cross-Industry Data," Papers 1992-05, Tasmania - Department of Economics.
    2. Mueller,Dennis C. (ed.), 1990. "The Dynamics of Company Profits," Cambridge Books, Cambridge University Press, number 9780521383721.
    3. Shepherd, William G, 1972. "The Elements of Market Structure," The Review of Economics and Statistics, MIT Press, vol. 54(1), pages 25-37, February.
    4. 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, Elsevier.
    5. Cubbin, John & Geroski, Paul A, 1987. "The Convergence of Profits in the Long Run: Inter-firm and Inter-industry Comparisons," Journal of Industrial Economics, Wiley Blackwell, vol. 35(4), pages 427-442, June.
    6. Saving, Thomas R, 1970. "Concentration Ratios and the Degree of Monopoly," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 11(1), pages 139-146, February.
    7. Masson, Robert T & Shaanan, Joseph, 1984. "Social Costs of Oligopoly and the Value of Competition," Economic Journal, Royal Economic Society, vol. 94(375), pages 520-535, September.
    8. Carter, John R, 1978. "Collusion, Efficiency, and Antitrust," Journal of Law and Economics, University of Chicago Press, vol. 21(2), pages 435-444, October.
    9. Demsetz, Harold, 1973. "Industry Structure, Market Rivalry, and Public Policy," Journal of Law and Economics, University of Chicago Press, vol. 16(1), pages 1-9, April.
    10. Cowling, Keith & Waterson, Michael, 1976. "Price-Cost Margins and Market Structure," Economica, London School of Economics and Political Science, vol. 43(171), pages 267-274, August.
    11. Geroski, P A, 1981. "Specification and Testing the Profits-Concentration Relationship: Some Experiments for the UK," Economica, London School of Economics and Political Science, vol. 48(191), pages 279-288, August.
    12. Mueller,Dennis C., 2009. "Profits in the Long Run," Cambridge Books, Cambridge University Press, number 9780521101592.
    13. R. Schmalensee & R. Willig (ed.), 1989. "Handbook of Industrial Organization," Handbook of Industrial Organization, Elsevier, edition 1, volume 2, number 2.
    14. Newman, Howard H, 1978. "Strategic Groups and the Structure-Performance Relationship," The Review of Economics and Statistics, MIT Press, vol. 60(3), pages 417-427, August.
    15. Ravenscraft, David J, 1983. "Structure-Profit Relationships at the Line of Business and Industry Level," The Review of Economics and Statistics, MIT Press, vol. 65(1), pages 22-31, February.
    16. Waring, Geoffrey F, 1996. "Industry Differences in the Persistence of Firm-Specific Returns," American Economic Review, American Economic Association, vol. 86(5), pages 1253-1265, December.
    17. Saxonhouse, Gary R, 1976. "Estimated Parameters as Dependent Variables," American Economic Review, American Economic Association, vol. 66(1), pages 178-183, March.
    18. R. Schmalensee & R. Willig (ed.), 1989. "Handbook of Industrial Organization," Handbook of Industrial Organization, Elsevier, edition 1, volume 1, number 1.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ivaldi, Marc & Motis, Jrissy, 2007. "Mergers as Auctions," CEPR Discussion Papers 6434, C.E.P.R. Discussion Papers.
    2. Ollinger, Michael & Nguyen, Sang V. & Blayney, Donald P. & Chambers, William & Nelson, Kenneth B., 2006. "Food Industry Mergers and Acquisitions Lead to Higher Labor Productivity," Economic Research Report 7246, United States Department of Agriculture, Economic Research Service.
    3. Mita Bhattacharya & Harry Bloch, 2000. "Adjustment of Profits: Evidence from Australian Manufacturing," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 27(2), pages 157-173, June.
    4. Štefan Lyócsa & Svatopluk Svoboda & Tomáš Výrost, 2010. "Industry Concentration Dynamics and Structural Changes: The Case of Aerospace & Defence," Working Papers IES 2010/20, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised Aug 2010.
    5. Darko Tipurić & Mirjana Pejić Bach, 2009. "Changes in Industrial Concentration in the Croatian Economy (1995-2006)," EFZG Working Papers Series 0903, Faculty of Economics and Business, University of Zagreb.
    6. Irfan Akbar Kazi & Suzanne Salloy, 2014. "Dynamics in the correlations of the Credit Default Swaps’ G14 dealers: Are there any contagion effects due to Lehman Brothers’ bankruptcy and the global financial crisis?," Working Papers 2014-237, Department of Research, Ipag Business School.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. repec:onb:oenbwp:y::i:36:b:1 is not listed on IDEAS
    2. Bhattacharjeean, Arnab & Majumdar, Sumit K., 2011. "How much does industry matter in an emerging market economy?," SIRE Discussion Papers 2011-51, Scottish Institute for Research in Economics (SIRE).
    3. Alena Zemplinerova, 2010. "Competition policy and economic analysis: What can we learn from firm and industry data?," CERGE-EI Books, The Center for Economic Research and Graduate Education - Economics Institute, Prague, edition 1, number b07, May.
    4. Hoskins, Jake D. & Carson, Stephen J., 2022. "Industry conditions, market share, and the firm’s ability to derive business-line profitability from diverse technological portfolios," Journal of Business Research, Elsevier, vol. 149(C), pages 178-192.
    5. Micha Gisser & Raymond Sauer, 2000. "The Aggregate Relation between Profits and Concentration is Consistent with Cournot Behavior," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 16(3), pages 229-246, May.
    6. Rexhäuser, Sascha & Rammer, Christian, 2011. "Unmasking the Porter hypothesis: Environmental innovations and firm-profitability," ZEW Discussion Papers 11-036, ZEW - Leibniz Centre for European Economic Research.
    7. Catherine Matraves & Laura Rondi, 2007. "Product Differentiation, Industry Concentration and Market Share Turbulence," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 14(1), pages 37-57.
    8. Fernando Vega-Redondo, 1999. "Markets under bounded rationality: from theory to facts," Investigaciones Economicas, Fundación SEPI, vol. 23(1), pages 3-26, January.
    9. Slade, Margaret E., 2004. "Competing models of firm profitability," International Journal of Industrial Organization, Elsevier, vol. 22(3), pages 289-308, March.
    10. Anita M. McGahan & Michael E. Porter, 2002. "What Do We Know About Variance in Accounting Profitability?," Management Science, INFORMS, vol. 48(7), pages 834-851, July.
    11. Natália Barbosa & Helen Louri, 2005. "Corporate Performance: Does Ownership Matter? A Comparison of Foreign- and Domestic-Owned Firms in Greece and Portugal," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 27(1), pages 73-102, August.
    12. Sheldon, Ian M., 2017. "The Competitiveness Of Agricultural Product And Input Markets: A Review And Synthesis Of Recent Research," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 49(1), pages 1-44, February.
    13. Ian Sheldon & Richard Sperling, 2003. "Estimating the Extent of Imperfect Competition in the Food Industry: What Have We Learned?," Journal of Agricultural Economics, Wiley Blackwell, vol. 54(1), pages 89-109, March.
    14. Mark J Roberts & Dylan Supina, 1997. "Output Price And Markup Dispersion In Micro Data: The Roles Of Producer And Heterogeneity And Noise," Working Papers 97-10, Center for Economic Studies, U.S. Census Bureau.
    15. Sascha Rexhäuser & Christian Rammer, 2014. "Environmental Innovations and Firm Profitability: Unmasking the Porter Hypothesis," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 57(1), pages 145-167, January.
    16. Weche John P. & Wagner Joachim, 2021. "Markups and Concentration in the Context of Digitization: Evidence from German Manufacturing Industries," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 241(5-6), pages 667-699, November.
    17. Esperanza Gracia, 1999. "Márgenes y cuotas de mercado. Un análisis con un micropanel," Investigaciones Economicas, Fundación SEPI, vol. 23(3), pages 393-428, September.
    18. Tanveer Ahmad Khan & Indrani Chakraborty, 2022. "Dynamic Interactions Between Structure and Performance in the Textile and Clothing Industry in India: An Econometric Approach," Journal of Quantitative Economics, Springer;The Indian Econometric Society (TIES), vol. 20(1), pages 173-209, March.
    19. Klaus Salhofer & Christoph Tribl & Franz Sinabell, 2012. "Market power in Austrian food retailing: the case of milk products," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 39(1), pages 109-122, February.
    20. Stefan Folster & Sam Peltzman, 1997. "The Social Costs of Regulation and Lack of Competition in Sweden: A Summary," NBER Chapters, in: The Welfare State in Transition: Reforming the Swedish Model, pages 315-352, National Bureau of Economic Research, Inc.
    21. Hovhannisyan, Vardges & Bozic, Marin, 2016. "The Relationship Between Price And Market Structure: Evidence From The Us Food Retail Industry," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 236222, Agricultural and Applied Economics Association.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:onb:oenbwp:36. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Markus Knell (email available below). General contact details of provider: https://edirc.repec.org/data/oenbbat.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.