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An Empirical Model of Pricing, Market Share and Market Conduct: An Application to Import Competition in US Manufacturing

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  • Allen, Chris

Abstract

In this paper, the authors set out a new empirical model of pricing, market share, and market conduct for a differentiated products industry. The model exhibits the property of a variable elasticity of firm demand: as a firm's market share increases, it faces increasingly inelastic demand. Price/cost margins therefore increase as market share rises. Market conduct is described using conjectural variations. The model has a flexible functional formulation and is particularly suitable for time-series estimation. The authors illustrate its use by investigating the structure of market competition in pricing strategies between domestic and importing firms in different sectors of U.S. industry during the 1980s. Copyright 1998 by Blackwell Publishers Ltd and The Victoria University of Manchester

Suggested Citation

  • Allen, Chris, 1998. "An Empirical Model of Pricing, Market Share and Market Conduct: An Application to Import Competition in US Manufacturing," The Manchester School of Economic & Social Studies, University of Manchester, vol. 66(2), pages 196-221, March.
    • Handle: RePEc:bla:manch2:v:66:y:1998:i:2:p:196-221
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    Cited by:

    1. Michael Olive, 2004. "Price Adjustment with Price Conjectures," Econometric Society 2004 Australasian Meetings 131, Econometric Society.
    2. Olive, Michael, 2004. "Pricing behaviour in Japanese manufacturing: a comparative study," Japan and the World Economy, Elsevier, vol. 16(4), pages 417-429, December.
    3. Brissimis, Sophocles N. & Kosma, Theodora S., 2014. "A unified framework for analysing price interdependence, innovative activity and exchange rate pass-through," Economics Letters, Elsevier, vol. 122(2), pages 159-162.
    4. Harry Bloch & Michael Olive, 1999. "Cyclical and Competitive Influences on Pricing in Australian Manufacturing," The Economic Record, The Economic Society of Australia, vol. 75(3), pages 268-279, September.
    5. Ronchi, Loraine, 2006. "Fairtrade and market failures in agricultural commodity markets," Policy Research Working Paper Series 4011, The World Bank.
    6. Harry Bloch & Michael Olive, 2003. "Influences on Pricing and Markup in Segmented Manufacturing Markets," Journal of Industry, Competition and Trade, Springer, vol. 3(1), pages 87-107, March.
    7. Coutts, Ken & Norman, Neville R., 2007. "Global influences on UK manufacturing prices: 1970-2000," European Economic Review, Elsevier, vol. 51(5), pages 1205-1221, July.
    8. Sophocles N. Brissimis & Theodora S. Kosma, 2006. "Market Conduct, Price Interdependence and Exchange Rate Pass-Through," Working Papers 51, Bank of Greece.

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