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Concentration Indices: Back to the Drawing Board Patterns in Neighboring Areas

Author

Listed:
  • Vassilis Droucopoulos

    (Professor, Department of Economics, University of Athens, Greece)

  • Theodore Papadogonas

    (Research Associate, Department of Economics, University of Athens, Greece)

Abstract

This paper delves into a time-honoured, yet unduly neglected, problem that has dogged the construction of concentration ratios, a measure which has been widely used in the industrial economics literature, namely the bias imparted by the existence of (a) ‘specialisation’ and (b) ‘coverage’ (alternatively named ‘exclusiveness’). Equipped with a new, appropriately detailed set of data (Greek manufacturing sector, 1989-1992), we demonstrate the presence of bias and perform various tests which gauge the extent to which ordinarily estimated concentration ratios are defective. Finally, we suggest guidelines for their correction and proper use, so that newly designed concentration ratios will be an improvement over past practice.

Suggested Citation

  • Vassilis Droucopoulos & Theodore Papadogonas, 2000. "Concentration Indices: Back to the Drawing Board Patterns in Neighboring Areas," Ekonomia, Cyprus Economic Society and University of Cyprus, vol. 4(1), pages 55-72, Summer.
  • Handle: RePEc:ekn:ekonom:v:4:y:2000:i:1:p:55-72
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    Cited by:

    1. Lefteris Tsoulfidis & Persefoni Tsaliki, 2011. "Classical Competition and Regulating Capital: Theory and Empirical Evidence," Discussion Paper Series 2011_02, Department of Economics, University of Macedonia, revised Feb 2011.
    2. Theodore Papadogonas & Vassilis Droucopoulos, 2004. "Do Small Firms Breathe Heavily Down The Necks of Their Larger Brethren?," South-Eastern Europe Journal of Economics, Association of Economic Universities of South and Eastern Europe and the Black Sea Region, vol. 2(1), pages 59-65.

    More about this item

    JEL classification:

    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General

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