Market Concentration Measures and Investment Decisions in Mexican Manufacturing Firms
Antonio Ruiz Porras
Universidad de Guadalajara - Centro Universitario de Ciencias Económico Administrativas (CUCEA)
Universidad de Guadalajara
Accounting & Taxation, Vol. 2, No. 1, pp. 59-69, 2010
We study how different measures of market concentration explain investment decisions of Mexican manufacturing firms. The Herfindahl-Hirschman Index 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 than by the Herfindahl-Hirschman Index. Thus our results suggest that the Mexican Dominance Index might be useful as a measure of market structure and competition. The results also suggest that market concentration reduces investment. These conclusions are based on several econometric assessments.
Number of Pages in PDF File: 11
Keywords: Dominance Index, Herfindahl-Hirschman Index, Investment, Mexico, Manufacturing
JEL Classification: L40, L22, L60
Date posted: June 30, 2011
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