Tracing the Dynamics of Competition: Evidence from Company Profits
Economic Inquiry, Vol. 46, Issue 2, pp. 208-213, April 2008
6 Pages Posted: 18 Apr 2008
This article proposes a simple approach to analyzing profit dynamics, which allows for time-varying persistence of profits. The time series model is a simple autoregressive process where the dynamics of the persistence parameter follow an autoregressive process. Using the longest time series available on profits for more than a hundred U.S. firms, we find that there is ample evidence of time variation in the persistence parameter.
JEL Classification: L00, C22
Suggested Citation: Suggested Citation