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Estimating the Size Distribution of Firms Using Government Summary Statistics

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  • Golan, Amos
  • Judge, George
  • Perloff, Jeffrey M

Abstract

Using a maximum entropy technique, the authors estimate the market shares of each firm in an industry using the available government summary statistics such as the four-firm concentration ratio and the Herfindahl-Hirschmann Index. They show that their technique is very effective in estimating the distribution of market shares in twenty industries. The authors' results provide support for the recent practice of using the Herfindahl-Hirschmann Index rather than four-firm concentration ratio as the key explanatory variable in many market power studies, if only one measure is to be used. Copyright 1996 by Blackwell Publishing Ltd.

Suggested Citation

  • Golan, Amos & Judge, George & Perloff, Jeffrey M, 1996. "Estimating the Size Distribution of Firms Using Government Summary Statistics," Journal of Industrial Economics, Wiley Blackwell, vol. 44(1), pages 69-80, March.
  • Handle: RePEc:bla:jindec:v:44:y:1996:i:1:p:69-80
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    1. Jacquemin, Alexis P & Berry, Charles H, 1979. "Entropy Measure of Diversification and Corporate Growth," Journal of Industrial Economics, Wiley Blackwell, vol. 27(4), pages 359-369, June.
    2. Kwoka, John E, Jr, 1979. "The Effect of Market Share Distribution on Industry Performance," The Review of Economics and Statistics, MIT Press, vol. 61(1), pages 101-109, February.
    3. Zellner, A., 1988. "Optimal Information-Processing And Bayes' Theorem," Papers m8803, Southern California - Department of Economics.
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    Cited by:

    1. I. Brezina & J. Pekár & Z. Čičková & M. Reiff, 2016. "Herfindahl–Hirschman index level of concentration values modification and analysis of their change," Central European Journal of Operations Research, Springer;Slovak Society for Operations Research;Hungarian Operational Research Society;Czech Society for Operations Research;Österr. Gesellschaft für Operations Research (ÖGOR);Slovenian Society Informatika - Section for Operational Research;Croatian Operational Research Society, vol. 24(1), pages 49-72, March.
    2. Miljkovic, Dragan & Jin, Hyun J. & Paul, Rodney, 2008. "The role of productivity growth and farmers' income protection policies in the decline of relative farm prices in the United States," Journal of Policy Modeling, Elsevier, vol. 30(5), pages 873-885.
    3. Huettel, Silke & Jongeneel, Roelof A., 2009. "Impact of the EU Milk Quota on Structural Change in the Dairy Sectors of Germany and The Netherlands," 2009 Conference, August 16-22, 2009, Beijing, China 50943, International Association of Agricultural Economists.
    4. Wu, Ximing & Perloff, Jeffrey M. & Golan, Amos, 2002. "Effects of Government Policies on Income Distribution and Welfare," Institute for Research on Labor and Employment, Working Paper Series qt6jx7h62v, Institute of Industrial Relations, UC Berkeley.
    5. LaFrance, J. T. & Beatty, T. K. M. & Pope, R. D. & Agnew, G. K., 2002. "Information theoretic measures of the income distribution in food demand," Journal of Econometrics, Elsevier, vol. 107(1-2), pages 235-257, March.
    6. Liron-Espana, Carmen & Lopez, Rigoberto A., 2001. "When is Concentration Beneficial?," Research Reports 25201, University of Connecticut, Food Marketing Policy Center.
    7. Yves Léony & Ludo Peeters & Maurice Quinqu & Yves Surry, 1999. "The Use of Maximum Entropy to Estimate Input-Output Coefficients From Regional Farm Accounting Data," Journal of Agricultural Economics, Wiley Blackwell, vol. 50(3), pages 425-439.
    8. Msangi, Siwa & Howitt, Richard E., 2006. "Estimating Disaggregate Production Functions: An Application to Northern Mexico," 2006 Annual meeting, July 23-26, Long Beach, CA 21080, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    9. Wu, Ximing & Perloff, Jeffrey M., 2005. "GMM Estimation of a Maximum Distribution With Interval Data," Institute for Research on Labor and Employment, Working Paper Series qt7jf5w1ht, Institute of Industrial Relations, UC Berkeley.
    10. Steven C. Michael, 2009. "Entrepreneurial signaling to attract resources: the case of franchising," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 30(6), pages 405-422.
    11. Drucker, Joshua & Feser, Edward, 2012. "Regional industrial structure and agglomeration economies: An analysis of productivity in three manufacturing industries," Regional Science and Urban Economics, Elsevier, vol. 42(1-2), pages 1-14.
    12. Sunila George & Raghbendra Jha & Hari K. Nagarajan, 2002. "The Evolution and Structure of the Two-wheeler Industry in India," ASARC Working Papers 2002-02, The Australian National University, Australia South Asia Research Centre.
    13. Bhuyan, Sanjib & Lopez, Rigoberto A., 1998. "What Determines Welfare Losses From Oligopoly Power In The Food And Tobacco Industries?," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 27(2), October.
    14. Lopez, Rigoberto A. & Azzam, Azzeddine M. & Liron-Espana, Carmen, 2001. "Market Power and/or Efficiency: An Application to U.S. Food Processing," Research Reports 25160, University of Connecticut, Food Marketing Policy Center.
    15. Howitt, Richard E. & Msangi, Siwa, 2002. "Reconstructing Disaggregate Production Functions," 2002 Annual meeting, July 28-31, Long Beach, CA 19585, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    16. Rigoberto Lopez & Elena Lopez & Carmen Lirón-España, 2014. "Who Benefits from Industrial Concentration? Evidence from U.S. Manufacturing," Journal of Industry, Competition and Trade, Springer, vol. 14(3), pages 303-317, September.
    17. Martin Bod’a, 2017. "Stochastic sensitivity analysis of concentration measures," Central European Journal of Operations Research, Springer;Slovak Society for Operations Research;Hungarian Operational Research Society;Czech Society for Operations Research;Österr. Gesellschaft für Operations Research (ÖGOR);Slovenian Society Informatika - Section for Operational Research;Croatian Operational Research Society, vol. 25(2), pages 441-471, June.
    18. Rigoberto Lopez & Azzeddine Azzam & Carmen Lirón-España, 2002. "Market Power and/or Efficiency: A Structural Approach," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 20(2), pages 115-126, March.
    19. Joshua Drucker, 2009. "Trends in Regional Industrial Concentration in the United States," Working Papers 09-06, Center for Economic Studies, U.S. Census Bureau.

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