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Long-run Equilibrium in the Empirical Study of Monopoly and Competition

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  • Glick, Mark
  • Ehrbar, Hans

Abstract

A long-run tendency of industry profit rates to converge to a single competitive level has been a fundamental tenet of the industrial organization approach to the study of competitiveness in a market economy. This paper shows that for the post-World War II period a weak equalization can be econometrically identified with different reaction speeds by industry. However, persistent profit rate differences endure. Finally, a portfolio theory of risk is considered as an explanation of these differentials. Copyright 1990 by Oxford University Press.

Suggested Citation

  • Glick, Mark & Ehrbar, Hans, 1990. "Long-run Equilibrium in the Empirical Study of Monopoly and Competition," Economic Inquiry, Western Economic Association International, vol. 28(1), pages 151-162, January.
  • Handle: RePEc:oup:ecinqu:v:28:y:1990:i:1:p:151-62
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    Cited by:

    1. Yvonne J. Acheampong & James E. Epperson & Timothy A. Park & Lewell F. Gunter, 2004. "Profitability adjustment patterns in international food and consumer products industries," Agribusiness, John Wiley & Sons, Ltd., vol. 20(1), pages 31-43.
    2. Freeman, Alan, 2006. "An Invasive Metaphor: the Concept of Centre of Gravity in Economics," MPRA Paper 6812, University Library of Munich, Germany.
    3. Stefania Tescari & Andrea Vaona, 2014. "Regulating Rates of Return Do Gravitate in US Manufacturing!," Metroeconomica, Wiley Blackwell, vol. 65(3), pages 377-396, July.
    4. Dumenil, Gerald & Levy, Dominique, 1995. "Structural change and prices of production," Structural Change and Economic Dynamics, Elsevier, vol. 6(4), pages 397-434, December.
    5. Tsoulfidis, Lefteris & Alexiou, Constantinos & Parthenidis, Thanasis, 2015. "Revisiting profit persistence and the stock market in Japan," Structural Change and Economic Dynamics, Elsevier, vol. 33(C), pages 10-24.
    6. Andrea Vaona, 2010. "On the gravitation and convergence of industry profit rates in Denmark, Finland, Italy and the US," Working Papers 02/2010, University of Verona, Department of Economics.
    7. Andrea Vaona, 2011. "Further econometric evidence on the gravitation and convergence of industrial rates of return on regulating capital," Working Papers 08/2011, University of Verona, Department of Economics.
    8. Andrea Vaona, 2010. "On the gravitation and convergence of industry incremental rates of return in OECD countries," Working Papers 03/2010, University of Verona, Department of Economics.

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