Competition

CentER Discussion Paper No. 2000-104

37 Pages Posted: 5 Dec 2000

See all articles by Jan Boone

Jan Boone

Tilburg University - Center for Economic Research (CentER); Centre for Economic Policy Research (CEPR); TILEC

Multiple version iconThere are 2 versions of this paper

Date Written: October 2000

Abstract

Competition has been modelled in the literature in a number of ways. What do these different parametrizations of competition have in common? For instance, it turns out that it is not always the case that a rise in competition reduces price cost margins, industry wide profits or concentration. All parametrizations of competition, considered here, have two features in common. First, the reallocation effect: a rise in competition raises the profits of a firm relative to the profits of a less efficient firm. Second, a rise in competition reduces the profits of the least efficient firm active in the industry.

Keywords: competition, measures of competition, concentration, price cost margin, profits

JEL Classification: D43, L13

Suggested Citation

Boone, Jan, Competition (October 2000). CentER Discussion Paper No. 2000-104. Available at SSRN: https://ssrn.com/abstract=249144 or http://dx.doi.org/10.2139/ssrn.249144

Jan Boone (Contact Author)

Tilburg University - Center for Economic Research (CentER) ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands
+31 13 466 2399 (Phone)
+31 13 466 3042 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

TILEC ( email )

Warandelaan 2
Tilburg, 5000 LE
Netherlands

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