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Market share instability: an application of unit root tests to the cigarette industry

  • Gallet, Craig A.
  • List, John A.

This paper uses market share data to infer the nature of rivalry in the U.S. cigarette industry over the 1934-94 period. Unlike previous studies, which measure rivalry from various constructs of market share instability, we examine the time-series properties of market shares to determine whether or not rivalry is evident. Our empirical results imply that a majority of firm-level market shares are martingales, suggesting market shares have been unstable from 1934-94. This result leads us to conclude that rivalry in the cigarette industry has remained strong.

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File URL: http://www.sciencedirect.com/science/article/pii/S0148-6195(01)00042-X
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Article provided by Elsevier in its journal Journal of Economics and Business.

Volume (Year): 53 (2001)
Issue (Month): 5 ()
Pages: 473-480

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Handle: RePEc:eee:jebusi:v:53:y:2001:i:5:p:473-480
Contact details of provider: Web page: http://www.elsevier.com/locate/jeconbus

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  1. Carlino, Gerald A. & Mills, Leonard O., 1993. "Are U.S. regional incomes converging? : A time series analysis," Journal of Monetary Economics, Elsevier, vol. 32(2), pages 335-346, November.
  2. Loewy, Michael B. & Papell, David H., 1996. "Are U.S. regional incomes converging? Some further evidence," Journal of Monetary Economics, Elsevier, vol. 38(3), pages 587-598, December.
  3. Zivot, Eric & Andrews, Donald W K, 1992. "Further Evidence on the Great Crash, the Oil-Price Shock, and the Unit-Root Hypothesis," Journal of Business & Economic Statistics, American Statistical Association, vol. 10(3), pages 251-70, July.
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  5. Sumner, Daniel A, 1981. "Measurement of Monopoly Behavior: An Application to the Cigarette Industry," Journal of Political Economy, University of Chicago Press, vol. 89(5), pages 1010-19, October.
  6. Nelson, Charles R. & Plosser, Charles I., 1982. "Trends and random walks in macroeconmic time series : Some evidence and implications," Journal of Monetary Economics, Elsevier, vol. 10(2), pages 139-162.
  7. Perron, Pierre, 1989. "The Great Crash, the Oil Price Shock, and the Unit Root Hypothesis," Econometrica, Econometric Society, vol. 57(6), pages 1361-1401, November.
  8. Sandler, Ralph D, 1988. "Market Share Instability in Commercial Airline Markets and the Impact of Deregulation," Journal of Industrial Economics, Wiley Blackwell, vol. 36(3), pages 327-35, March.
  9. Rhoades, Stephen A., 1985. "Market share as a source of market power: Implications and some evidence," Journal of Economics and Business, Elsevier, vol. 37(4), pages 343-363, December.
  10. Barnett, Paul G. & Keeler, Theodore E. & Hu, Teh-wei, 1995. "Oligopoly structure and the incidence of cigarette excise taxes," Journal of Public Economics, Elsevier, vol. 57(3), pages 457-470, July.
  11. Eckard, E Woodrow, Jr, 1991. "Competition and the Cigarette TV Advertising Ban," Economic Inquiry, Western Economic Association International, vol. 29(1), pages 119-33, January.
  12. Gerald A. Carlino & Leonard O. Mills, 1993. "Testing neoclassical convergence in regional incomes and earnings," Working Papers 93-22, Federal Reserve Bank of Philadelphia.
  13. Caves, Richard E & Porter, Michael E, 1978. "Market Structure, Oligopoly, and Stability of Market Shares," Journal of Industrial Economics, Wiley Blackwell, vol. 26(4), pages 289-313, June.
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  15. John A. List, 1999. "Have Air Pollutant Emissions Converged Among U.S. Regions? Evidence from Unit Root Tests," Southern Economic Journal, Southern Economic Association, vol. 66(1), pages 144-155, July.
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