Competition: theoretical parameterizations and empirical measures
| Authors |
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| Publication date |
2008
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| Journal |
Journal of Institutional and Theoretical Economics
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| Volume | Issue number |
164 | 4
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| Pages (from-to) |
587-611
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| Number of pages |
25
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| Organisations |
-
Faculty of Economics and Business (FEB) - Amsterdam School of Economics Research Institute (ASE-RI)
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| Abstract |
This paper proposes relative profits (RP) as a robust measure of competition. I consider nine different parameterizations of competition and show that more intense competition increases the profits of a firm relative to a less efficient firm. Further, popular competition measures like the price-cost margin (PCM) and Herfindahl index (H) can either increase or decrease in response to more intense competition. In this sense, RP is a more robust competition measure than PCM and H.
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| Document type |
Article
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| Published at |
https://doi.org/10.1628/093245608786534640
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