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Conduct Parameter Estimation in Homogeneous Goods Markets with Equilibrium Existence and Uniqueness Conditions: The Case of Log-linear Specification

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  • Yuri Matsumura
  • Suguru Otani

Abstract

We propose a constrained generalized method of moments estimator (GMM) incorporating theoretical conditions for the unique existence of equilibrium prices for estimating conduct parameters in a log-linear model with homogeneous goods markets. First, we derive such conditions. Second, Monte Carlo simulations confirm that in a log-linear model, incorporating the conditions resolves the problems of implausibly low or negative values of conduct parameters.

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  • Yuri Matsumura & Suguru Otani, 2024. "Conduct Parameter Estimation in Homogeneous Goods Markets with Equilibrium Existence and Uniqueness Conditions: The Case of Log-linear Specification," Papers 2407.12422, arXiv.org.
    • Handle: RePEc:arx:papers:2407.12422
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    1. Lau, Lawrence J., 1982. "On identifying the degree of competitiveness from industry price and output data," Economics Letters, Elsevier, vol. 10(1-2), pages 93-99.
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