Testable Implications for the Bresnahan-Lau Model of Market Competition

7 Pages Posted: 14 May 2010

See all articles by L. Cherchye

L. Cherchye

KU Leuven; Erasmus Research Institute of Management (ERIM)

Thomas Demuynck

Université Libre de Bruxelles (ULB) - European Center for Advanced Research in Economics and Statistics (ECARES)

Bram De Rock

Université Libre de Bruxelles (ULB) - European Center for Advanced Research in Economics and Statistics (ECARES)

Date Written: April 1, 2010

Abstract

We derive necessary and sufficient testable implications on the reduced form price and quantity functions for the Bresnahan-Lau model of market competition. The conditions are twofold. A first condition relates to the fact that the reduced form price function should correspond to an inverse demand function. The second condition captures that the degree of competition must be invariant to changes in the exogenous variables.

Suggested Citation

Cherchye, Laurens and Demuynck, Thomas and De Rock, Bram, Testable Implications for the Bresnahan-Lau Model of Market Competition (April 1, 2010). Available at SSRN: https://ssrn.com/abstract=1604371 or http://dx.doi.org/10.2139/ssrn.1604371

Laurens Cherchye (Contact Author)

KU Leuven ( email )

Oude Markt 13
Leuven, Vlaams-Brabant
Belgium

Erasmus Research Institute of Management (ERIM)

P.O. Box 1738
3000 DR Rotterdam
Netherlands

Thomas Demuynck

Université Libre de Bruxelles (ULB) - European Center for Advanced Research in Economics and Statistics (ECARES) ( email )

Ave. Franklin D Roosevelt, 50 - C.P. 114
Brussels, B-1050
Belgium

Bram De Rock

Université Libre de Bruxelles (ULB) - European Center for Advanced Research in Economics and Statistics (ECARES) ( email )

Av. F. D. Roosevelt, 50
CP 114
Brussels, B-1050
Belgium

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