A New Way to Measure Competition
CentER Discussion Paper No. 2004-31
35 Pages Posted: 24 Jun 2004
There are 2 versions of this paper
A New Way to Measure Competition
Date Written: 2004
Abstract
This paper introduces a new way to measure competition based on firms' profits. Within a general model, we derive conditions under which this measure is monotone in competition, where competition can be intensified both through a fall in entry barriers and through more aggressive interaction between players. The measure is shown to be more robust theoretically than the price cost margin. This allows for an empirical test of the problems associated with the price cost margin as a measure of competition.
Keywords: Competition, measures of competition, price cost margin, variable profits
JEL Classification: D43, L13
Suggested Citation: Suggested Citation
Do you have a job opening that you would like to promote on SSRN?
Recommended Papers
-
By Paul Klemperer and Jeremy Bulow
-
A New Way to Measure Competition
By Jan Boone
-
Market Structure, Scale Economies and Industry Performance
By Rabah Amir
-
A New Approach to Measuring Competition in the Loan Markets of the Euro Area
-
Endogenous Product Differentiation in Credit Markets: What Do Borrowers Pay for?
By Moshe Kim, Eirik Gaard Kristiansen, ...
-
How (Not) to Measure Competition
By Jan Boone, Jan C. Van Ours, ...
-
How (Not) to Measure Competition
By Jan Boone, Jan C. Van Ours, ...
-
By Rachel Griffith, Jan Boone, ...
-
Monetary Policy in a Downturn: Are Financial Crises Special?
By Morten L. Bech, Leonardo Gambacorta, ...