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Market concentration measures and investment decisions in Mexican manufacturing firms

Author

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  • Lopez-Mateo, Celina
  • Ruiz-Porras, Antonio

Abstract

We study how alternative measures of market concentration may explain investment decisions of Mexican manufacturing firms. The measures include the Herfindahl-Hirschman Index and the Dominance one. The first one is the traditional measure of market structure concentration. The Dominance Index is a competition measure used by Mexican regulators. The econometric assessments suggest that investment decisions of Mexican firms can be better explained by the Dominance Index measure than by the Herfindahl-Hirschman one. Thus our results suggest that the Mexican Dominance Index might be useful as a measure of market structure and competition. Such conclusion is based on several econometric assessments. In all cases we use certain characteristics of the firms (size, cash flows, investment opportunities and capital intensity) as control variables.

Suggested Citation

  • Lopez-Mateo, Celina & Ruiz-Porras, Antonio, 2010. "Market concentration measures and investment decisions in Mexican manufacturing firms," MPRA Paper 23182, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:23182
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    References listed on IDEAS

    as
    1. Marc Escrihuela-Villar, 2008. "Innovation And Market Concentration With Asymmetric Firms," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 17(3), pages 195-207.
    2. Dirk Czarnitzki & Hanna Hottenrott, 2011. "R&D investment and financing constraints of small and medium-sized firms," Small Business Economics, Springer, vol. 36(1), pages 65-83, January.
    3. Vinod Mishra, 2007. "The Determinants Of R&D Expenditure Of Firms: Evidence From A Cross-Section Of Indian Firms," Economic Papers, The Economic Society of Australia, vol. 26(3), pages 237-248, September.
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    More about this item

    Keywords

    Investment; Dominance Index; Herfindahl-Hirschman Index; Manufacturing; Mexico;

    JEL classification:

    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General

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