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Structure, conduct and performance: a simultaneous equations investigation for the Brazilian manufacturing industry

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  • Marcelo Resende

Abstract

The article investigated structure-conduct-performance (SCP) relationships in the context of the Brazilian manufacturing industry in 1996. For that purpose, it considered a system with four equations pertaining concentration, advertising, R&D and profitability that was estimated with simultaneous equation models. In addition to the usual explanatory variables proxying barriers to entry and demand conditions, the article considered organizational practices and incentive schemes variables. The evidence indicated an important role for variables related to barriers to entry in affecting market structure, an important and nonlinear effect of concentration on advertising, a relevant impact of firm-size on the propensity to exert R&D effort and finally a significant positive impact of concentration on profitability, and were similar to the previous evidence for developed countries. Additionally, no important roles were detected for organizational practices and incentive schemes on the SCP relationships.

Suggested Citation

  • Marcelo Resende, 2007. "Structure, conduct and performance: a simultaneous equations investigation for the Brazilian manufacturing industry," Applied Economics, Taylor & Francis Journals, vol. 39(7), pages 937-942.
    • Handle: RePEc:taf:applec:v:39:y:2007:i:7:p:937-942
    DOI: 10.1080/00036840500461949
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    References listed on IDEAS

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    1. Stephen Martin, 1979. "Advertising, Concentration, and Profitability: The Simultaneity Problem," Bell Journal of Economics, The RAND Corporation, vol. 10(2), pages 639-647, Autumn.
    2. Geroski, P. A., 1982. "Simultaneous equations models of the structure-performance paradigm," European Economic Review, Elsevier, vol. 19(1), pages 145-158.
    3. Gabel, H Landis, 1979. "A Simultaneous Equation Analysis of the Structure and Performance of the United States Petroleum Refining Industry," Journal of Industrial Economics, Wiley Blackwell, vol. 28(1), pages 89-104, September.
    4. Strickland, Allyn D & Weiss, Leonard W, 1976. "Advertising, Concentration, and Price-Cost Margins," Journal of Political Economy, University of Chicago Press, vol. 84(5), pages 1109-1121, October.
    5. Charles DeLorme & Peter Klein & David Kamerschen & Lisa Ford Voeks, 2003. "Structure, conduct and performance: a simultaneous equations approach," Applied Economics, Taylor & Francis Journals, vol. 35(1), pages 13-20.
    6. Evans, William N & Froeb, Luke M & Werden, Gregory J, 1993. "Endogeneity in the Concentration-Price Relationship: Causes, Consequences, and Cures," Journal of Industrial Economics, Wiley Blackwell, vol. 41(4), pages 431-438, December.
    7. Mata, Jose & Machado, Jose A. F., 1996. "Firm start-up size: A conditional quantile approach," European Economic Review, Elsevier, vol. 40(6), pages 1305-1323, June.
    8. Marcos Lima & Marcelo Resende, 2004. "Profit margins and business cycles in the Brazilian industry: a panel data study," Applied Economics, Taylor & Francis Journals, vol. 36(9), pages 923-930.
    9. Connolly, Robert A & Hirschey, Mark, 1984. "R&D, Market Structure, and Profits: A Value-Based Approach," The Review of Economics and Statistics, MIT Press, vol. 66(4), pages 682-686, November.
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    5. Bhuyan Sanjib & McCafferty Michael, 2013. "U.S. Brewing Industry Profitability: A Simultaneous Determination of Structure, Conduct, and Performance," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 11(1), pages 139-150, November.

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