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Heterogeneities within Industries and Structure-Performance Models

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  • Dennis Mueller
  • Burkhard Raunig

Abstract

This paper tests whether the results from standard structure-conduct-performance [SCP] models estimated at the industry level are sensitive to the degree of heterogeneity of the firms in the industries. Industries are separated into homogeneous and heterogeneous categories depending on whether the profit rates of firms within an industry converge on a common value or not. In "homogeneous" industries we find that both the long-run projected returns on assets for the industries and Bureau of Census price-cost-margins are well explained by variables usually included in SCP models, as in particular industry concentration. In contrast, few if any of the usual SCP-model variables are statistically significant in the regressions for heterogeneous industries.
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Suggested Citation

  • Dennis Mueller & Burkhard Raunig, 1999. "Heterogeneities within Industries and Structure-Performance Models," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 15(4), pages 303-320, December.
  • Handle: RePEc:kap:revind:v:15:y:1999:i:4:p:303-320 DOI: 10.1023/A:1007775731338
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    References listed on IDEAS

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    8. Mueller,Dennis C., 2009. "Profits in the Long Run," Cambridge Books, Cambridge University Press, number 9780521101592, March.
    9. Newman, Howard H, 1978. "Strategic Groups and the Structure-Performance Relationship," The Review of Economics and Statistics, MIT Press, vol. 60(3), pages 417-427, August.
    10. Cowling, Keith & Waterson, Michael, 1976. "Price-Cost Margins and Market Structure," Economica, London School of Economics and Political Science, vol. 43(171), pages 267-274, August.
    11. Saxonhouse, Gary R, 1976. "Estimated Parameters as Dependent Variables," American Economic Review, American Economic Association, vol. 66(1), pages 178-183, March.
    12. Mueller,Dennis C. (ed.), 1990. "The Dynamics of Company Profits," Cambridge Books, Cambridge University Press, number 9780521383721, March.
    13. Cubbin, John & Geroski, Paul A, 1987. "The Convergence of Profits in the Long Run: Inter-firm and Inter-industry Comparisons," Journal of Industrial Economics, Wiley Blackwell, vol. 35(4), pages 427-442, June.
    14. Carter, John R, 1978. "Collusion, Efficiency, and Antitrust," Journal of Law and Economics, University of Chicago Press, vol. 21(2), pages 435-444, October.
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    Citations

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    Cited by:

    1. Juan Carlos Bou & Albert Satorra, 2003. "The persistence of abnormal returns at industry and firm levels," Economics Working Papers 729, Department of Economics and Business, Universitat Pompeu Fabra.
    2. Mita Bhattacharya & Harry Bloch, 2000. "Adjustment of Profits: Evidence from Australian Manufacturing," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 27(2), pages 157-173, June.
    3. Darko Tipurić & Mirjana Pejić Bach, 2009. "Changes in Industrial Concentration in the Croatian Economy (1995-2006)," EFZG Working Papers Series 0903, Faculty of Economics and Business, University of Zagreb.
    4. Ivaldi, Marc & Motis, Jrissy, 2007. "Mergers as Auctions," CEPR Discussion Papers 6434, C.E.P.R. Discussion Papers.
    5. Simon Feeny & Mark Harris & Mark Rogers, 2005. "A dynamic panel analysis of the profitability of Australian tax entities," Empirical Economics, Springer, pages 209-233.
    6. repec:eee:corfin:v:45:y:2017:i:c:p:467-479 is not listed on IDEAS
    7. Andrzej Cieślik & Jan Michałek & Anna Michałek, 2012. "Export Activity in Visegrad-4 Countries: Firm Level Investigation," Ekonomia journal, Faculty of Economic Sciences, University of Warsaw, vol. 30.
    8. Emili Grifell-Tatjé & P. Marquès-Gou, 2002. "Measuring Sustained Superior Performance at the Firm Level," Working Papers 0208, Departament Empresa, Universitat Autònoma de Barcelona, revised Jul 2002.

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