Further Tests of Static Oligopoly Models: Whiskey, 1882-1898

16 Pages Posted: 24 Sep 2003

See all articles by Karen Clay

Karen Clay

Carnegie Mellon University - H. John Heinz III School of Public Policy and Management; National Bureau of Economic Research (NBER)

Werner Troesken

University of Pittsburgh - Department of Economics; National Bureau of Economic Research (NBER)

Abstract

Using data from the turn-of-the-century whiskey industry, we conduct tests of the NEIO methodology similar to those conducted by Genesove and Mullin (1998). Like Genesove and Mullin, we find that the NEIO methodology appears to perform reasonably well for low levels of market power. Conduct is somewhat overestimated, with estimates ranging from 0.17 to 0.35 as compared to direct estimates of 0.09. Cost parameters are generally underestimated. Estimates of conduct and remaining cost parameters improve significantly, however, with additional information on cost. Estimates improve further if conduct is allowed to have two regimes, which are identified based on historical evidence.

Suggested Citation

Clay, Karen B. and Troesken, Werner, Further Tests of Static Oligopoly Models: Whiskey, 1882-1898. Journal of Industrial Economics, Vol. 51, pp. 151-166, June 2003. Available at SSRN: https://ssrn.com/abstract=418942

Karen B. Clay (Contact Author)

Carnegie Mellon University - H. John Heinz III School of Public Policy and Management ( email )

Pittsburgh, PA 15213-3890
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Werner Troesken

University of Pittsburgh - Department of Economics ( email )

4901 Wesley Posvar Hall
230 South Bouquet Street
Pittsburgh, PA 15260
United States
412-648-7451 (Phone)
412-648-9074 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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