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Testable Competing Hypotheses from Structure-Performance Theory: Efficient Structure versus Market Power

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  • Harris, Frederick H deB

Abstract

This paper provides a structure-performance theory that can accommodate leading firm efficiency as well as several competing market power hypotheses. The author derive s testable implications distinguishing the simple collusion, product differentiation, and scale economy hypotheses from the innovative lea ding-firm alternative. It is shown that recent evidence of a positive market share-price-cost margin (PCM) relationship and a nonpositive concentration-PCM relationship can reject the scale economy and simpl e collusion hypotheses in homogeneous product markets. Unfortunately, this same evidence cannot reject the product differentiation hypothe sis in favor of leading-firm efficiency. Copyright 1988 by Blackwell Publishing Ltd.

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  • Harris, Frederick H deB, 1988. "Testable Competing Hypotheses from Structure-Performance Theory: Efficient Structure versus Market Power," Journal of Industrial Economics, Wiley Blackwell, vol. 36(3), pages 267-280, March.
    • Handle: RePEc:bla:jindec:v:36:y:1988:i:3:p:267-80
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    Cited by:

    1. Elena Huergo, 1998. "Identificación del poder de mercado: estimaciones para la industria española," Investigaciones Economicas, Fundación SEPI, vol. 22(1), pages 69-91, January.
    2. Mita Bhattacharya, 2002. "Group Profit, Market Share and Efficiency: Evidence from Australian Manufacturing," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 20(2), pages 187-199, March.
    3. Haller, Lawrence E. & Cotterill, Ronald W., 1996. "Evaluating Traditional Share-Price and Residual Demand Measures of Market Power in the Catsup Industry," Research Reports 25193, University of Connecticut, Food Marketing Policy Center.
    4. Conyon, M. & Machin, S., 1989. "Profit Determination In U.K. Manufacturing," The Warwick Economics Research Paper Series (TWERPS) 330, University of Warwick, Department of Economics.
    5. Digal, Larry N. & Ahmadi-Esfahani, Fredoun Z., 2002. "Market power analysis in the retail food industry: a survey of methods," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 46(4), pages 1-26.
    6. Bhuyan, Sanjib & Lopez, Rigoberto A., 1998. "What Determines Welfare Losses From Oligopoly Power In The Food And Tobacco Industries?," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 27(2), pages 1-8, October.
    7. Rigoberto A. López & Elena López & Carmen Liron-Espana, 2009. "When is concentration beneficial? Evidence from U.S. manufacturing," Alcamentos 0901, Universidad de Alcalá, Departamento de Economía..
    8. Frederick H. deB. Harris & Adam S. Hyde & Robert A. Wood, 2014. "The Persistence of Dominant‐Firm Market Share: Raising Rivals' Cost on the New York Stock Exchange," Southern Economic Journal, John Wiley & Sons, vol. 81(1), pages 91-112, July.
    9. Rigoberto Lopez & Elena Lopez & Carmen Lirón-España, 2014. "Who Benefits from Industrial Concentration? Evidence from U.S. Manufacturing," Journal of Industry, Competition and Trade, Springer, vol. 14(3), pages 303-317, September.
    10. Subir Bairagi & Azzeddine Azzam, 2014. "Does the Grameen Bank exert market power over borrowers?," Applied Economics Letters, Taylor & Francis Journals, vol. 21(12), pages 866-869, August.
    11. Hamilton, Stephen F., 1999. "Demand shifts and market structure in free-entry oligopoly equilibria," International Journal of Industrial Organization, Elsevier, vol. 17(2), pages 259-275, February.

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