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Collinearity in Linear Structural Models of Market Power

Author

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  • Perloff, Jeffrey M.
  • Shen, Edward Z.

Abstract

The well-known structural model used to estimate market structure suffers from a severe collinearity problem if the marginal cost and demand equations are linear.

Suggested Citation

  • Perloff, Jeffrey M. & Shen, Edward Z., 2001. "Collinearity in Linear Structural Models of Market Power," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt6js7c38h, Department of Agricultural & Resource Economics, UC Berkeley.
  • Handle: RePEc:cdl:agrebk:qt6js7c38h
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    References listed on IDEAS

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    1. Richard E. Just & Wen S. Chern, 1980. "Tomatoes, Technology, and Oligopsony," Bell Journal of Economics, The RAND Corporation, vol. 11(2), pages 584-602, Autumn.
    2. Bresnahan, Timothy F., 1982. "The oligopoly solution concept is identified," Economics Letters, Elsevier, vol. 10(1-2), pages 87-92.
    3. Perloff,Jeffrey M. & Karp,Larry S. & Golan,Amos, 2007. "Estimating Market Power and Strategies," Cambridge Books, Cambridge University Press, number 9780521011143, August.
    4. Lau, Lawrence J., 1982. "On identifying the degree of competitiveness from industry price and output data," Economics Letters, Elsevier, vol. 10(1-2), pages 93-99.
    5. Bresnahan, Timothy F., 1989. "Empirical studies of industries with market power," Handbook of Industrial Organization,in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 2, chapter 17, pages 1011-1057 Elsevier.
    6. Corts, Kenneth S., 1998. "Conduct parameters and the measurement of market power," Journal of Econometrics, Elsevier, vol. 88(2), pages 227-250, November.
    7. Deodhar, Satish Y. & Sheldon, Ian M., 1997. "Market Power In The World Market For Soymeal Exports," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 0(Number 1), pages 1-9, July.
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    Citations

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    Cited by:

    1. Timothy Gunning & Robin Sickles, 2013. "Competition and market power in physician private practices," Empirical Economics, Springer, vol. 44(2), pages 1005-1029, April.
    2. Maes, Dries & Vancauteren, Mark & Van Passel, Steven, 2016. "Investigating market power in the Belgian pork production chain," 149th Seminar, October 27-28, 2016, Rennes, France 245114, European Association of Agricultural Economists.
    3. Coccorese, Paolo & Pellecchia, Alfonso, 2013. "Multimarket contact, competition and pricing in banking," Journal of International Money and Finance, Elsevier, vol. 37(C), pages 187-214.
    4. Grau, Aaron Stephan Alexander & Hockmann, Heinrich, 2017. "Estimating oligopsony power on two vertically integrated markets," 2017 International Congress, August 28-September 1, 2017, Parma, Italy 261277, European Association of Agricultural Economists.
    5. repec:kap:jproda:v:49:y:2018:i:2:d:10.1007_s11123-018-0527-9 is not listed on IDEAS

    More about this item

    Keywords

    market power; estimation;

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • C1 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General

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