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An empirical illustration of an alternative approach to measuring the market power and high profits hypothesis

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  • Andersen, Otto
  • Rynning, Marjo-Riitta

Abstract

This paper discusses the problems of testing the structure-profit relationship, and presents an alternative approach to measuring the market power and profitability hypothesis. The results from an empirical study on firm level indicate that firms in a monopoly situation can maintain a high profitability, if and only if there are extensive barriers to entry. There seems, however, not to be a general linear relationship between concentration and profitability, which has been a common assumption in many empirical studies in this area.

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  • Andersen, Otto & Rynning, Marjo-Riitta, 1991. "An empirical illustration of an alternative approach to measuring the market power and high profits hypothesis," International Journal of Industrial Organization, Elsevier, vol. 9(2), pages 239-249, June.
    • Handle: RePEc:eee:indorg:v:9:y:1991:i:2:p:239-249
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    Cited by:

    1. Wang, Wei & Zhang, Yue-Jun, 2022. "Does China's carbon emissions trading scheme affect the market power of high-carbon enterprises?," Energy Economics, Elsevier, vol. 108(C).
    2. Esperanza Gracia, 1999. "Márgenes y cuotas de mercado. Un análisis con un micropanel," Investigaciones Economicas, Fundación SEPI, vol. 23(3), pages 393-428, September.

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