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Lerner Index. Estimation and the Impact of its Market Structure Determinants

  • Alejandro Castañeda Sabido

    ()

    (El Colegio de México)

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    Using the reasoning that assumes that a pro-cyclical Solow residual is an indication of the presence of market power, the paper estimates the Lerner index. At the same time in which we estimate the Lerner index, we measure the impact of industry structure variables (concentration and imports) on this index. Because we have panel data, we also allow for a change in the impact of these variables across time. For the whole manufacturing sector, we find that concentration and imports have a differing impact on the Lerner index across the business cycle. We find evidence that shows that the Lerner index behaves anticyclically. And we also make the analysis by type of good (durables and non-durables) and find differing impacts of concentration and imports by type of good.

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    File URL: http://www.economiamexicana.cide.edu/num_anteriores/XV-2/ALEJANDRO_CASTANEDA.pdf
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    Article provided by in its journal Economia Mexicana NUEVA EPOCA.

    Volume (Year): XV (2006)
    Issue (Month): 2 (July-December)
    Pages: 165-197

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    Handle: RePEc:emc:ecomex:v:15:y:2006:i:2:p:165-197
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    1. Susan Athey & Kyle Bagwell & Chris Sanchirico, 2004. "Collusion and Price Rigidity," Review of Economic Studies, Oxford University Press, vol. 71(2), pages 317-349.
    2. Nelson, C. & Startz, R., 1988. "Some Furthere Results On The Exact Small Sample Properties Of The Instrumental Variable Estimator," Discussion Papers in Economics at the University of Washington 88-06, Department of Economics at the University of Washington.
    3. Green, Edward J & Porter, Robert H, 1984. "Noncooperative Collusion under Imperfect Price Information," Econometrica, Econometric Society, vol. 52(1), pages 87-100, January.
    4. Robert E. Hall, 1986. "The Relation Between Price and Marginal Cost in U.S. Industry," NBER Working Papers 1785, National Bureau of Economic Research, Inc.
    5. Pugel, Thomas A, 1980. "Foreign Trade and US Market Performance," Journal of Industrial Economics, Wiley Blackwell, vol. 29(2), pages 119-29, December.
    6. John Shea, 1996. "Instrument Relevance in Multivariate Linear Models: A Simple Measure," NBER Technical Working Papers 0193, National Bureau of Economic Research, Inc.
    7. Domowitz, Ian & Hubbard, R Glenn & Petersen, Bruce C, 1986. "The Intertemporal Stability of the Concentration-Margins Relationship," Journal of Industrial Economics, Wiley Blackwell, vol. 35(1), pages 13-34, September.
    8. Bils, Mark, 1987. "The Cyclical Behavior of Marginal Cost and Price," American Economic Review, American Economic Association, vol. 77(5), pages 838-55, December.
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