IDEAS home Printed from https://ideas.repec.org/a/rfh/jprjor/v8y2022i4p125-136.html
   My bibliography  Save this article

Structure-Conduct-Performance (SCP) Paradigm: A VAR and VECM-based Granger Causality Analysis

Author

Listed:
  • Asad Abbas

    (Lecturer in Economics, COMSATS University Islamabad, Vehari Campus and PhD Student, School of Economics, Bahauddin Zakariya University Multan, Pakistan)

  • Muhammad Ramzan Sheikh

    (Associate Professor, School of Economics, Bahauddin Zakariya University Multan, Pakistan)

Abstract

This study has focused on Pakistan’s manufacturing sector through the lens of the structure, conduct and performance (SCP) model over the period of 2004-2018. Three types of analyses i.e., SCP paradigm in a VAR framework, SCP paradigm in a Granger causality analysis through VAR framework and SCP paradigm in a VECM framework have been conducted. The pairwise Granger causality shows that there is bi-directional causality between structure and performance, conduct and performance and conduct and structure. The block exogeneity Wald test suggests that one-way causality is in the SCP paradigm. Three-panel cointegration tests i.e., Kao residual cointegration test, Johansen Fisher Panel cointegration test and Pedroni Residual Cointegration test confirm the existence of the long run relationship. VECM-based Granger causality exhibits the long run and short run causality in the SCP approach. The study suggests that all the stakeholders of SCP must formulate their policies by recognizing their mutual interdependence.

Suggested Citation

  • Asad Abbas & Muhammad Ramzan Sheikh, 2022. "Structure-Conduct-Performance (SCP) Paradigm: A VAR and VECM-based Granger Causality Analysis," Journal of Policy Research (JPR), Research Foundation for Humanity (RFH), vol. 8(4), pages 125-136, December.
    • Handle: RePEc:rfh:jprjor:v:8:y:2022:i:4:p:125-136
    as

    Download full text from publisher

    File URL: https://jprpk.com/index.php/jpr/article/view/152/212
    Download Restriction: no
    File URL: https://jprpk.com/index.php/jpr/article/view/152
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Yoon, Seok, 2004. "A note on the market structure and performance in Korean manufacturing industries," Journal of Policy Modeling, Elsevier, vol. 26(6), pages 733-746, September.
    2. Sims, Christopher A, 1980. "Macroeconomics and Reality," Econometrica, Econometric Society, vol. 48(1), pages 1-48, January.
    3. M. Nur Rianto Al Arif & Tara Bilqis Awwaliyah, 2019. "Market Share, Concentration Ratio and Profitability: Evidence from Indonesian Islamic Banking Industry," Journal of Central Banking Theory and Practice, Central bank of Montenegro, vol. 8(2), pages 189-201.
    4. Amjad, Rashid, 1977. "Profitability and industrial concentration in Pakistan," MPRA Paper 35085, University Library of Munich, Germany.
    5. Bhattacharya, Mita & Bloch, Harry, 2000. "The dynamics of industrial concentration in Australian manufacturing," International Journal of Industrial Organization, Elsevier, vol. 18(8), pages 1181-1199, December.
    6. Mita Bhattacharya, 2002. "Industrial concentration and competition in Malaysian manufacturing," Applied Economics, Taylor & Francis Journals, vol. 34(17), pages 2127-2134.
    7. Engle, Robert & Granger, Clive, 2015. "Co-integration and error correction: Representation, estimation, and testing," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 39(3), pages 106-135.
    8. Ambarish Chandra & Matthew Weinberg, 2018. "How Does Advertising Depend on Competition? Evidence from U.S. Brewing," Management Science, INFORMS, vol. 64(11), pages 5132-5148, November.
    9. Ali, Amjad, 2022. "Determining Pakistan's Financial Dependency: The Role of Financial Globalization and Corruption," MPRA Paper 116097, University Library of Munich, Germany.
    10. Pierpaolo Pattitoni & Barbara Petracci & Massimo Spisni, 2014. "Determinants of profitability in the EU-15 area," Applied Financial Economics, Taylor & Francis Journals, vol. 24(11), pages 763-775, June.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Xu, Haifeng & Hamori, Shigeyuki, 2012. "Dynamic linkages of stock prices between the BRICs and the United States: Effects of the 2008–09 financial crisis," Journal of Asian Economics, Elsevier, vol. 23(4), pages 344-352.
    2. Zheng, Li & Abbasi, Kashif Raza & Salem, Sultan & Irfan, Muhammad & Alvarado, Rafael & Lv, Kangjuan, 2022. "How technological innovation and institutional quality affect sectoral energy consumption in Pakistan? Fresh policy insights from novel econometric approach," Technological Forecasting and Social Change, Elsevier, vol. 183(C).
    3. Ratti, Ronald A. & Vespignani, Joaquin L., 2013. "Crude oil prices and liquidity, the BRIC and G3 countries," Energy Economics, Elsevier, vol. 39(C), pages 28-38.
    4. Biqing Cai & Jiti Gao & Dag Tjøstheim, 2017. "A New Class of Bivariate Threshold Cointegration Models," Journal of Business & Economic Statistics, Taylor & Francis Journals, vol. 35(2), pages 288-305, April.
    5. Gossé, Jean-Baptiste & Guillaumin, Cyriac, 2013. "L’apport de la représentation VAR de Christopher A. Sims à la science économique," L'Actualité Economique, Société Canadienne de Science Economique, vol. 89(4), pages 309-319, Décembre.
    6. Marin, Dalia, 1992. "Is the Export-Led.Growth Hypothesis Valid for Industrialized Countries?," The Review of Economics and Statistics, MIT Press, vol. 74(4), pages 678-688, November.
    7. Pawel Milobedzki, 2010. "The Term Structure of the Polish Interbank Rates. A Note on the Symmetry of their Reversion to the Mean," Dynamic Econometric Models, Uniwersytet Mikolaja Kopernika, vol. 10, pages 81-95.
    8. M. T. Alguacil & V. Orts, 2003. "Inward Foreign Direct Investment and Imports in Spain," International Economic Journal, Taylor & Francis Journals, vol. 17(3), pages 19-38.
    9. Ansgar Belke & Robert Czudaj, 2010. "Is Euro Area Money Demand (Still) Stable? Cointegrated VAR Versus Single Equation Techniques," Applied Economics Quarterly (formerly: Konjunkturpolitik), Duncker & Humblot, Berlin, vol. 56(4), pages 285-315.
    10. Dilshad Ahmad & Bilal Sarwar & Kiran Sarwar & Bilal Tariq, 2022. "Government revenue and Expenditure Nexus: Empirical Evidence of Pakistan," Journal of Policy Research (JPR), Research Foundation for Humanity (RFH), vol. 8(4), pages 246-252, December.
    11. Vicente Meneu & Hipòlit Torró, 2003. "Asymmetric covariance in spot‐futures markets," Journal of Futures Markets, John Wiley & Sons, Ltd., vol. 23(11), pages 1019-1046, November.
    12. Gediminas Adomavicius & Jesse Bockstedt & Alok Gupta, 2012. "Modeling Supply-Side Dynamics of IT Components, Products, and Infrastructure: An Empirical Analysis Using Vector Autoregression," Information Systems Research, INFORMS, vol. 23(2), pages 397-417, June.
    13. Ericsson, Neil R & Hendry, David F & Mizon, Grayham E, 1998. "Exogeneity, Cointegration, and Economic Policy Analysis," Journal of Business & Economic Statistics, American Statistical Association, vol. 16(4), pages 370-387, October.
    14. Eleni Constantinou & Avo Kazandjian & Georgios P. Kouretas & Vera Tahmazian, 2008. "Common Stochastic Trends Among The Cyprus Stock Exchange And The Ase, Lse And Nyse," Bulletin of Economic Research, Wiley Blackwell, vol. 60(4), pages 327-349, October.
    15. Rapach, David E. & Wohar, Mark E., 2004. "Testing the monetary model of exchange rate determination: a closer look at panels," Journal of International Money and Finance, Elsevier, vol. 23(6), pages 867-895, October.
    16. Scheiblecker, Marcus, 2013. "Between cointegration and multicointegration: Modelling time series dynamics by cumulative error correction models," Economic Modelling, Elsevier, vol. 31(C), pages 511-517.
    17. Rangan Gupta & Stephen Miller, 2012. "“Ripple effects” and forecasting home prices in Los Angeles, Las Vegas, and Phoenix," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 48(3), pages 763-782, June.
    18. Eva Liljeblom & Sabur Mollah & Patrik Rotter, 2015. "Do dividends signal future earnings in the Nordic stock markets?," Review of Quantitative Finance and Accounting, Springer, vol. 44(3), pages 493-511, April.
    19. B. Faye & E. Le Fur & S. Prat, 2015. "Dynamics of fine wine and asset prices: evidence from short- and long-run co-movements," Applied Economics, Taylor & Francis Journals, vol. 47(29), pages 3059-3077, June.
    20. Chow Sheung-Chi & Cunado Juncal & Gupta Rangan & Wong Wing-Keung, 2018. "Causal relationships between economic policy uncertainty and housing market returns in China and India: evidence from linear and nonlinear panel and time series models," Studies in Nonlinear Dynamics & Econometrics, De Gruyter, vol. 22(2), pages 1-15, April.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:rfh:jprjor:v:8:y:2022:i:4:p:125-136. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Dr. Muhammad Irfan Chani (email available below). General contact details of provider: https://edirc.repec.org/data/rffhlpk.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.