Measuring Monopoly Power, Revisited

Measuring Monopoly Power, Revisited The accuracy of monopoly power measures derived from case studyeconometric models has been questioned recently by Hyde andPerloff (1995) and Boyer (1996). Using the standard industry-formof that model, Hyde and Perloff show that the parameter estimatesassociated with monopoly power are highly sensitive to mis-specificationsof the demand and supply functional forms. Boyer'scriticism is made in principle: he reproves the model for generallyfailing to.“... capture the diversity and complexity of oligopoly ... ”in respect to entry, product differentiation, fixity of capital, capitaladjustment costs, dynamic demand linkages, and variations inmonopoly power over time and in the cross-section of firms. Whilethese several criticisms might appear to point at inherent weaknessesin the case study econometric approach, it is here arguedthat the problem lies in the usual empirical practice. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Review of Industrial Organization Springer Journals

Measuring Monopoly Power, Revisited

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Publisher
Kluwer Academic Publishers
Copyright
Copyright © 1998 by Kluwer Academic Publishers
Subject
Economics; Industrial Organization; Microeconomics
ISSN
0889-938X
eISSN
1573-7160
D.O.I.
10.1023/A:1007775727046
Publisher site
See Article on Publisher Site

Abstract

The accuracy of monopoly power measures derived from case studyeconometric models has been questioned recently by Hyde andPerloff (1995) and Boyer (1996). Using the standard industry-formof that model, Hyde and Perloff show that the parameter estimatesassociated with monopoly power are highly sensitive to mis-specificationsof the demand and supply functional forms. Boyer'scriticism is made in principle: he reproves the model for generallyfailing to.“... capture the diversity and complexity of oligopoly ... ”in respect to entry, product differentiation, fixity of capital, capitaladjustment costs, dynamic demand linkages, and variations inmonopoly power over time and in the cross-section of firms. Whilethese several criticisms might appear to point at inherent weaknessesin the case study econometric approach, it is here arguedthat the problem lies in the usual empirical practice.

Journal

Review of Industrial OrganizationSpringer Journals

Published: Oct 6, 2004

References

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