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Functional Forms and Oligopolistic Models: An Empirical Analysis

Author

Listed:
  • David Bouras

    (School of Business, Lincoln University, USA)

  • Troy Frank

    (School of Business, Lincoln University, USA)

  • Eric Burgess

    (School of Business, Lincoln University, USA)

Abstract

This paper attempts to empirically test the sensitivity of the New Empirical Industrial Organization (NEIO) approach to the assumed demand and cost functional forms. Such an approach relies upon oligopolistic models to infer the degree of competition in a market. Unlike prior studies (Genesove and Mullin, 1998; Clay and Troesken, 2003), this paper focuses on the effect of the assumed cost function on the assessment of market power. Using data from the US catfish industry, the empirical results reveal that the NEIO approach is fairly robust to the assumed demand and cost functional forms.

Suggested Citation

  • David Bouras & Troy Frank & Eric Burgess, 2017. "Functional Forms and Oligopolistic Models: An Empirical Analysis," International Journal of Economics and Financial Issues, Econjournals, vol. 7(4), pages 645-649.
    • Handle: RePEc:eco:journ1:2017-04-75
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    References listed on IDEAS

    as
    1. Lau, Lawrence J., 1982. "On identifying the degree of competitiveness from industry price and output data," Economics Letters, Elsevier, vol. 10(1-2), pages 93-99.
    2. Iwata, Gyoichi, 1974. "Measurement of Conjectural Variations in Oligopoly," Econometrica, Econometric Society, vol. 42(5), pages 947-966, September.
    3. Kinnucan, Henry & Sullivan, Gregory, 1986. "Monopsonistic Food Processing and Farm Prices: The Case of the West Alabama Catfish Industry," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 18(2), pages 15-24, December.
    4. Newey, Whitney & West, Kenneth, 2014. "A simple, positive semi-definite, heteroscedasticity and autocorrelation consistent covariance matrix," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 33(1), pages 125-132.
    5. Bresnahan, Timothy F., 1982. "The oligopoly solution concept is identified," Economics Letters, Elsevier, vol. 10(1-2), pages 87-92.
    6. Karen Clay & Werner Troesken, 2003. "Further Tests of Static Oligopoly Models: Whiskey, 1882–1898," Journal of Industrial Economics, Wiley Blackwell, vol. 51(2), pages 151-166, June.
    7. David Genesove & Wallace P. Mullin, 1998. "Testing Static Oligopoly Models: Conduct and Cost in the Sugar Industry, 1890-1914," RAND Journal of Economics, The RAND Corporation, vol. 29(2), pages 355-377, Summer.
    8. Appelbaum, Elie, 1982. "The estimation of the degree of oligopoly power," Journal of Econometrics, Elsevier, vol. 19(2-3), pages 287-299, August.
    9. Bouras, David & Engle, Carole R., 2007. "Assessing Oligopoly and Oligopsony Power in the U.S. Catfish Industry," Journal of Agribusiness, Agricultural Economics Association of Georgia, vol. 25(1), pages 1-11.
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    Cited by:

    1. Chen, Yuquan & Yu, Xiaohua, 2018. "Does the centralized slaughtering policy create market power for pork industry in China?," China Economic Review, Elsevier, vol. 50(C), pages 59-71.

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    More about this item

    Keywords

    Demand; Cost; New Empirical Industrial Organization; Market Power;
    All these keywords.

    JEL classification:

    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General

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