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Long-run Equilibrium in the Empirical Study of Monopoly and Competition

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  • Glick, Mark
  • Ehrbar, Hans

Abstract

A long-run tendency of industry profit rates to converge to a single competitive level has been a fundamental tenet of the industrial organization approach to the study of competitiveness in a market economy. This paper shows that for the post-World War II period a weak equalization can be econometrically identified with different reaction speeds by industry. However, persistent profit rate differences endure. Finally, a portfolio theory of risk is considered as an explanation of these differentials. Copyright 1990 by Oxford University Press.

Suggested Citation

  • Glick, Mark & Ehrbar, Hans, 1990. "Long-run Equilibrium in the Empirical Study of Monopoly and Competition," Economic Inquiry, Western Economic Association International, vol. 28(1), pages 151-162, January.
    • Handle: RePEc:oup:ecinqu:v:28:y:1990:i:1:p:151-62
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    Cited by:

    1. Freeman, Alan, 2006. "An Invasive Metaphor: the Concept of Centre of Gravity in Economics," MPRA Paper 6812, University Library of Munich, Germany.
    2. Yvonne J. Acheampong & James E. Epperson & Timothy A. Park & Lewell F. Gunter, 2004. "Profitability adjustment patterns in international food and consumer products industries," Agribusiness, John Wiley & Sons, Ltd., vol. 20(1), pages 31-43.
    3. Dumenil, Gerald & Levy, Dominique, 1995. "Structural change and prices of production," Structural Change and Economic Dynamics, Elsevier, vol. 6(4), pages 397-434, December.
    4. Andrea Vaona, 2010. "On the gravitation and convergence of industry profit rates in Denmark, Finland, Italy and the US," Working Papers 02/2010, University of Verona, Department of Economics.
    5. Julian Wells, Julian, 2007. "The rate of profit as a random variable," MPRA Paper 98235, University Library of Munich, Germany.
    6. Ajit Zacharias, 2001. "Testing Profit Rate Equalization in the U.S. Manufacturing," Macroeconomics 0012013, University Library of Munich, Germany.
    7. Andrea Vaona, 2012. "Further econometric evidence on the gravitation and convergence of industrial rates of return on regulating capital," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 35(1), pages 113-136.
    8. Stefania Tescari & Andrea Vaona, 2014. "Regulating Rates of Return Do Gravitate in US Manufacturing!," Metroeconomica, Wiley Blackwell, vol. 65(3), pages 377-396, July.
    9. Theodore P. Lianos & Vassilis Droucopoulos, 1993. "Convergence and Hierarchy of Industrial Profit Rates: The Case of Greek Manufacturing," Review of Radical Political Economics, Union for Radical Political Economics, vol. 25(2), pages 67-80, June.
    10. Tsoulfidis, Lefteris & Alexiou, Constantinos & Parthenidis, Thanasis, 2015. "Revisiting profit persistence and the stock market in Japan," Structural Change and Economic Dynamics, Elsevier, vol. 33(C), pages 10-24.
    11. Andrea Vaona, 2010. "On the gravitation and convergence of industry incremental rates of return in OECD countries," Working Papers 03/2010, University of Verona, Department of Economics.

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