Market Concentration Measures and Investment Decisions in Mexican Manufacturing Firms

Accounting & Taxation, Vol. 2, No. 1, pp. 59-69, 2010

11 Pages Posted: 30 Jun 2011  

Antonio Ruiz Porras

Universidad de Guadalajara - Centro Universitario de Ciencias Económico Administrativas (CUCEA)

Celina López-Mateo

Universidad de Guadalajara

Date Written: 2010

Abstract

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.

Keywords: Dominance Index, Herfindahl-Hirschman Index, Investment, Mexico, Manufacturing

JEL Classification: L40, L22, L60

Suggested Citation

Ruiz Porras, Antonio and López-Mateo, Celina, Market Concentration Measures and Investment Decisions in Mexican Manufacturing Firms (2010). Accounting & Taxation, Vol. 2, No. 1, pp. 59-69, 2010. Available at SSRN: https://ssrn.com/abstract=1869191

Antonio Ruiz-Porras (Contact Author)

Universidad de Guadalajara - Centro Universitario de Ciencias Económico Administrativas (CUCEA) ( email )

Periférico Norte N° 799
Zapopan, 45100
Mexico

Celina López-Mateo

Universidad de Guadalajara ( email )

Guadalajara
8585
Guadalajara, Tlaquepaque 45604
Mexico

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