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Can market power be estimated?

Can market power be estimated? Simulation experiments demonstrate the strengths and weaknesses of the Panzar-Rosse, Hall, and structural approaches to estimating or testing market power. The structural model works well only if it is properly specified. The Hall methods works well in industries with constant retums to scale (CRS); however, even slight deviations from CRS lead to serious biases. Although easier to use than the structural approach, the Panzar-Rosse approach cannot distinguish between collusion and competition for some technologies. Some empirical applications of the Hall and Panzar-Rosse methods are provided. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Review of Industrial Organization Springer Journals

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References (12)

Publisher
Springer Journals
Copyright
Copyright
Subject
Economics; Industrial Organization; Microeconomics
ISSN
0889-938X
eISSN
1573-7160
DOI
10.1007/BF01024231
Publisher site
See Article on Publisher Site

Abstract

Simulation experiments demonstrate the strengths and weaknesses of the Panzar-Rosse, Hall, and structural approaches to estimating or testing market power. The structural model works well only if it is properly specified. The Hall methods works well in industries with constant retums to scale (CRS); however, even slight deviations from CRS lead to serious biases. Although easier to use than the structural approach, the Panzar-Rosse approach cannot distinguish between collusion and competition for some technologies. Some empirical applications of the Hall and Panzar-Rosse methods are provided.

Journal

Review of Industrial OrganizationSpringer Journals

Published: Jan 7, 2005

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