Market Structure and Profits, Market Power and Cournot: A Comment

Market Structure and Profits, Market Power and Cournot: A Comment 248 WILLIAM G. SHEPHERD correlated with the firms’ rates of profitability on capital. The slope coefficients were about 0.2, and the t -ratios were often over 5 or 6, indicating strong statistical significance. These market-share correlations superseded the concentration-price research by offering more precision of concept as well as of data. They focused the econometric analysis down more closely onto each firms’ specific market positions and motiva- tions: that is, onto the things that firms care most directly about – their own market positions and their own profits. That focus fits also the rising interest in the 1980s about dominant firms (as in Hay and Vickers, 1987). The market-share focus contrasted with the vague oligopoly-based hypotheses about joint-maximizing, entry-limited prices, and industry-wide price-cost ratios. But even when the structure-profit patterns were clear and strong, they could be re-interpreted in an upbeat way which took market power out of the picture. Chicago School members argued that all the structural findings – both the concen- tration-to-price and the market-share-to-profit-rate correlations – might merely re- flect superior performance. Or rather, they said, good performance really was the real cause, in nearly all cases – or actually in all of them. Hence the http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Review of Industrial Organization Springer Journals

Market Structure and Profits, Market Power and Cournot: A Comment

Loading next page...
 
/lp/springer-journals/market-structure-and-profits-market-power-and-cournot-a-comment-ASGm32nptZ
Publisher
Springer Journals
Copyright
Copyright © 2000 by Kluwer Academic Publishers
Subject
Economics; Industrial Organization; Microeconomics
ISSN
0889-938X
eISSN
1573-7160
D.O.I.
10.1023/A:1007878024734
Publisher site
See Article on Publisher Site

Abstract

248 WILLIAM G. SHEPHERD correlated with the firms’ rates of profitability on capital. The slope coefficients were about 0.2, and the t -ratios were often over 5 or 6, indicating strong statistical significance. These market-share correlations superseded the concentration-price research by offering more precision of concept as well as of data. They focused the econometric analysis down more closely onto each firms’ specific market positions and motiva- tions: that is, onto the things that firms care most directly about – their own market positions and their own profits. That focus fits also the rising interest in the 1980s about dominant firms (as in Hay and Vickers, 1987). The market-share focus contrasted with the vague oligopoly-based hypotheses about joint-maximizing, entry-limited prices, and industry-wide price-cost ratios. But even when the structure-profit patterns were clear and strong, they could be re-interpreted in an upbeat way which took market power out of the picture. Chicago School members argued that all the structural findings – both the concen- tration-to-price and the market-share-to-profit-rate correlations – might merely re- flect superior performance. Or rather, they said, good performance really was the real cause, in nearly all cases – or actually in all of them. Hence the

Journal

Review of Industrial OrganizationSpringer Journals

Published: Oct 16, 2004

References

You’re reading a free preview. Subscribe to read the entire article.


DeepDyve is your
personal research library

It’s your single place to instantly
discover and read the research
that matters to you.

Enjoy affordable access to
over 18 million articles from more than
15,000 peer-reviewed journals.

All for just $49/month

Explore the DeepDyve Library

Search

Query the DeepDyve database, plus search all of PubMed and Google Scholar seamlessly

Organize

Save any article or search result from DeepDyve, PubMed, and Google Scholar... all in one place.

Access

Get unlimited, online access to over 18 million full-text articles from more than 15,000 scientific journals.

Your journals are on DeepDyve

Read from thousands of the leading scholarly journals from SpringerNature, Elsevier, Wiley-Blackwell, Oxford University Press and more.

All the latest content is available, no embargo periods.

See the journals in your area

DeepDyve

Freelancer

DeepDyve

Pro

Price

FREE

$49/month
$360/year

Save searches from
Google Scholar,
PubMed

Create lists to
organize your research

Export lists, citations

Read DeepDyve articles

Abstract access only

Unlimited access to over
18 million full-text articles

Print

20 pages / month

PDF Discount

20% off