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We consider the relationship between prices and market structure for office supply superstores in the U.S. which was central to the Federal Trade Commission's opposition to the merger of Staples and Office Depot. Due to potential biases in a standard regression, we employ a two-stage approach in which a model of endogenous market structure provides correction terms for a second stage price regression. Using a cross-section of data on market structures and Staples' prices, we find that excluding the correction term substantially distorts the importance of competitors as the two-stage model yields stronger negative relationships between prices and market structure variables. Copyright 2008 The Authors.

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  • Mark D. Manuszak & Charles C. Moul, 2008. "PRICES AND ENDOGENOUS MARKET STRUCTURE IN OFFICE SUPPLY SUPERSTORES -super-," Journal of Industrial Economics, Wiley Blackwell, vol. 56(1), pages 94-112, March.
  • Handle: RePEc:bla:jindec:v:56:y:2008:i:1:p:94-112

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    References listed on IDEAS

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    2. Richard Blundell & Stephen Bond, 2000. "GMM Estimation with persistent panel data: an application to production functions," Econometric Reviews, Taylor & Francis Journals, vol. 19(3), pages 321-340.
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    Cited by:

    1. Stijn Ferrari & Frank Verboven & Hans Degryse, 2010. "Investment and Usage of New Technologies: Evidence from a Shared ATM Network," American Economic Review, American Economic Association, vol. 100(3), pages 1046-1079, June.
    2. Minniti, Antonio & Turino, Francesco, 2013. "Multi-product firms and business cycle dynamics," European Economic Review, Elsevier, vol. 57(C), pages 75-97.
    3. Orley Ashenfelter & Daniel Hosken & Matthew Weinberg, 2009. "Generating Evidence to Guide Merger Enforcement," CPI Journal, Competition Policy International, vol. 5.
    4. Colciago, Andrea & Etro, Federico, 2010. "Real business cycles with Cournot competition and endogenous entry," Journal of Macroeconomics, Elsevier, vol. 32(4), pages 1101-1117, December.
    5. Joseph Pancras & S. Sriram & V. Kumar, 2012. "Empirical Investigation of Retail Expansion and Cannibalization in a Dynamic Environment," Management Science, INFORMS, vol. 58(11), pages 2001-2018, November.
    6. Mattia Nardotto & Tommaso Valletti & Frank Verboven, 2015. "Unbundling The Incumbent: Evidence From Uk Broadband," Journal of the European Economic Association, European Economic Association, vol. 13(2), pages 330-362, April.
    7. Luis Orea, 2010. "The effect of legal barriers to entry in the Spanish retail market: a local market approach," Hacienda Pública Española, IEF, vol. 193(2), pages 49-74, June.
    8. Mitsuru Sunada, 2012. "Competition among movie theaters: an empirical investigation of the Toho–Subaru antitrust case," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 36(3), pages 179-206, August.
    9. Sridhar Narayanan, 2013. "Bayesian estimation of discrete games of complete information," Quantitative Marketing and Economics (QME), Springer, vol. 11(1), pages 39-81, March.
    10. Abe, Naohito & Kawaguchi, Daiji, 2010. "Incumbent's price response to new entry: The case of Japanese supermarkets," Journal of the Japanese and International Economies, Elsevier, vol. 24(2), pages 196-212, June.
    11. Gayle, Philip G. & Wu, Chi-Yin, 2013. "A re-examination of incumbents’ response to the threat of entry: Evidence from the airline industry," Economics of Transportation, Elsevier, vol. 2(4), pages 119-130.
    12. Ana Georgina Marín & Rainer Schwabe, 2013. "Bank Competition and Account Penetration: Evidence from Mexico," Working Papers 2013-14, Banco de México.
    13. Beckert, Walter & Mazzarotto, Nicola, 2010. "Price-concentration analysis in merger cases with differentiated products," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy (IfW), vol. 4, pages 1-23.
    14. Li, Yan & Lyons, Bruce, 2012. "Market structure, regulation and the speed of mobile network penetration," International Journal of Industrial Organization, Elsevier, vol. 30(6), pages 697-707.
    15. 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, 2016, Boston, Massachusetts 236222, Agricultural and Applied Economics Association.
    16. Haizhen Lin & Yijia Wang, 2012. "Competition and Price Discrimination in the Parking Garage Industry," Working Papers 2012-07, Indiana University, Kelley School of Business, Department of Business Economics and Public Policy.
    17. Katja Seim & Michael Sinkinson, 2016. "Mixed pricing in online marketplaces," Quantitative Marketing and Economics (QME), Springer, vol. 14(2), pages 129-155, June.
    18. repec:pri:cepsud:183ashenfelter is not listed on IDEAS
    19. Orea, Luis, 2009. "Legal and political barriers to entry in the Spanish retail market: a frontier approach," Efficiency Series Papers 2009/03, University of Oviedo, Department of Economics, Oviedo Efficiency Group (OEG).
    20. Manuszak, Mark D., 2010. "Predicting the impact of upstream mergers on downstream markets with an application to the retail gasoline industry," International Journal of Industrial Organization, Elsevier, vol. 28(1), pages 99-111, January.
    21. Faia, Ester, 2012. "Oligopolistic competition and optimal monetary policy," Journal of Economic Dynamics and Control, Elsevier, vol. 36(11), pages 1760-1774.
    22. Andrew Cohen & Michael Mazzeo, 2010. "Investment Strategies and Market Structure: An Empirical Analysis of Bank Branching Decisions," Journal of Financial Services Research, Springer;Western Finance Association, vol. 38(1), pages 1-21, August.
    23. Orea, Luis, 2009. "Entry efficiency and barriers to entry in the Spanish retail market," Efficiency Series Papers 2009/02, University of Oviedo, Department of Economics, Oviedo Efficiency Group (OEG).
    24. Vishal Singh & Ting Zhu, 2008. "Pricing and Market Concentration in Oligopoly Markets," Marketing Science, INFORMS, vol. 27(6), pages 1020-1035, 11-12.

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