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Deterministic Nonparametric Market Power Tests: An Empirical Investigation

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  • Raper, Kellie Curry
  • Noelke, Corinna M.

Abstract

A review of recent literature reflects the development of several deterministic nonparametric market power tests. We use Monte Carlo experiments to evaluate the veracity of four monopolistic and four monopsonistic market power tests that use the deterministic nonparametric approach. The experiments are implemented using data from ten known market structures. When results are compared to Raper, Love, and Shumway's (1999) findings concerning parametric market power tests in the Bresnahan-Lau tradition, we find that the parametric tests perform well while only two of the nonparametric tests appear able to identify market power.

Suggested Citation

  • Raper, Kellie Curry & Noelke, Corinna M., 2001. "Deterministic Nonparametric Market Power Tests: An Empirical Investigation," Staff Paper Series 11757, Michigan State University, Department of Agricultural, Food, and Resource Economics.
    • Handle: RePEc:ags:midasp:11757
    DOI: 10.22004/ag.econ.11757
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    References listed on IDEAS

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    1. Raper, Kellie Curry & Love, H. Alan & Shumway, C. Richard, 1998. "Distinguishing The Source Of Market Power: An Application To Cigarette Manufacturing," Faculty Paper Series 24021, Texas A&M University, Department of Agricultural Economics.
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