[go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/1859.html
   My bibliography  Save this paper

Lower bounds of concentration in a small open economy

Author

Listed:
  • Ilmakunnas, Pekka
Abstract
We examine how Sutton’s “bounds” approach works in a small country where industries have relatively high export and import intensities. Import competition is used as an indicator for the degree of competition in the low sunk cost industries. The bounds are estimated as stochastic frontiers, where observable industry characteristics, export intensity and entry barriers, are allowed to affect the mean and variance of the deviations from the frontier. In accordance with the theory, high R&D intensity industries have a lower bound for concentration, which is higher than that for low sunk cost intensity industries. For high advertising industries the theory does not hold as well. High import competition leads to a higher bound in the low sunk cost industries.

Suggested Citation

  • Ilmakunnas, Pekka, 2006. "Lower bounds of concentration in a small open economy," MPRA Paper 1859, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:1859
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/1859/1/MPRA_paper_1859.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Maria Letizia Giorgetti, 2003. "Lower Bound Estimation – Quantile Regression and Simplex Method: An Application to Italian Manufacturing Sectors," Journal of Industrial Economics, Wiley Blackwell, vol. 51(1), pages 113-120, March.
    2. Bruce Lyons & Catherine Matraves & Peter Moffatt, 2001. "Industrial Concentration and Market Integration in the European Union," Economica, London School of Economics and Political Science, vol. 68(269), pages 1-26, February.
    3. George Symeonidis, 2000. "Price Competition and Market Structure: The Impact of Cartel Policy on Concentration in the UK," Journal of Industrial Economics, Wiley Blackwell, vol. 48(1), pages 1-26, March.
    4. Mark Armstrong & Robert Porter (ed.), 2007. "Handbook of Industrial Organization," Handbook of Industrial Organization, Elsevier, edition 1, volume 3, number 1.
    5. Sutton, John, 2007. "Market Structure: Theory and Evidence," Handbook of Industrial Organization, in: Mark Armstrong & Robert Porter (ed.), Handbook of Industrial Organization, edition 1, volume 3, chapter 35, pages 2301-2368, Elsevier.
    6. S. Baranzoni & P. Bianchi & L. Lambertini, 2000. "Multiproduct Firms, Product Differentiation, and Market Structure," Working Papers 368, Dipartimento Scienze Economiche, Universita' di Bologna.
    7. Pedro L. Marín & Georges Siotis, 2007. "Innovation And Market Structure: An Empirical Evaluation Of The ‘Bounds Approach’ In The Chemical Industry," Journal of Industrial Economics, Wiley Blackwell, vol. 55(1), pages 93-111, March.
    8. Hung-Jen Wang, 2002. "Heteroscedasticity and Non-Monotonic Efficiency Effects of a Stochastic Frontier Model," Journal of Productivity Analysis, Springer, vol. 18(3), pages 241-253, November.
    9. Willam Greene, 2005. "Fixed and Random Effects in Stochastic Frontier Models," Journal of Productivity Analysis, Springer, vol. 23(1), pages 7-32, January.
    10. Catherine Matraves & Laura Rondi, 2007. "Product Differentiation, Industry Concentration and Market Share Turbulence," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 14(1), pages 37-57.
    11. Wahlroos, B & Backstrom, M, 1982. "R & D Intensity with Endogenous Concentration: Evidence for Finland," Empirical Economics, Springer, vol. 7(1-2), pages 13-22.
    12. Davies, Stephen & Lyons, Bruce, 1996. "Industrial Organization in the European Union: Structure, Strategy, and the Competitive Mechanism," OUP Catalogue, Oxford University Press, number 9780198289739.
    13. Duetsch, Larry L, 1984. "Entry and the Extent of Multiplant Operations," Journal of Industrial Economics, Wiley Blackwell, vol. 32(4), pages 477-487, June.
    14. Robinson, William T & Chiang, Jeongwen, 1996. "Are Sutton's Predictions Robust?: Empirical Insights into Advertising, R&D, and Concentration," Journal of Industrial Economics, Wiley Blackwell, vol. 44(4), pages 389-408, December.
    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. Catherine Matraves, 2002. "European Integration and Market Structure in the Soft Drinks Industry," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 9(3), pages 295-310.
    2. Jan Guldager JØrgensen & Philipp J.H. Schr–der, 2003. "Reductions in Real versus Tariff Barriers: The Impact on Industry Concentration," Journal of Industry, Competition and Trade, Springer, vol. 3(4), pages 251-268, December.
    3. Burghardt, Dirk, 2013. "The Impact of Trade Policy on Industry Concentration in Switzerland," Economics Working Paper Series 1317, University of St. Gallen, School of Economics and Political Science.
    4. Catherine Matraves & Laura Rondi, 2007. "Product Differentiation, Industry Concentration and Market Share Turbulence," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 14(1), pages 37-57.
    5. Silvana Robone & Alberto Zanardi, 2006. "Market structure and technology: evidence from the Italian National Health Service," International Journal of Health Economics and Management, Springer, vol. 6(3), pages 215-236, September.
    6. Belleflamme,Paul & Peitz,Martin, 2015. "Industrial Organization," Cambridge Books, Cambridge University Press, number 9781107687899.
    7. Benjamin C. Anderson & Ian M. Sheldon, 2024. "R&D Concentration in Soybean and Cotton Markets," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 64(1), pages 93-115, February.
    8. Kaplow, Louis & Shapiro, Carl, 2007. "Antitrust," Handbook of Law and Economics, in: A. Mitchell Polinsky & Steven Shavell (ed.), Handbook of Law and Economics, edition 1, volume 2, chapter 15, pages 1073-1225, Elsevier.
    9. Symeonidis, George, 2001. "Price Competition, Innovation and Profitability: Theory and UK Evidence," CEPR Discussion Papers 2816, C.E.P.R. Discussion Papers.
    10. Sabrina Auci & Laura Castellucci & Manuela Coromaldi, 2021. "How does public spending affect technical efficiency? Some evidence from 15 European countries," Bulletin of Economic Research, Wiley Blackwell, vol. 73(1), pages 108-130, January.
    11. Elizabeth G. Pontikes & William P. Barnett, 2015. "The Persistence of Lenient Market Categories," Organization Science, INFORMS, vol. 26(5), pages 1415-1431, October.
    12. Marcelo Resende, 2009. "Concentration and market size: lower bound estimates for the Brazilian industry," Economics Bulletin, AccessEcon, vol. 29(3), pages 2465-2471.
    13. Michael Raith, 2003. "Competition, Risk, and Managerial Incentives," American Economic Review, American Economic Association, vol. 93(4), pages 1425-1436, September.
    14. Paolo Coccorese & Giovanni Ferri & Punziana Lacitignola & Juan Lopez, 2016. "Market structure, outer versus inner competition: the case of Italy’s credit coop banks," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 63(3), pages 259-279, September.
    15. Lalit Manral, 2015. "The demand-side dynamics of entrant heterogeneity," Journal of Evolutionary Economics, Springer, vol. 25(2), pages 401-445, April.
    16. Llorca, Manuel & Orea, Luis & Pollitt, Michael G., 2016. "Efficiency and environmental factors in the US electricity transmission industry," Energy Economics, Elsevier, vol. 55(C), pages 234-246.
    17. Nadide YiÄŸiteli, 2023. "Production Losses Due to Technical Inefficiency: A Panel Data Analysis on the Case of BRICS-T Countries," EKOIST Journal of Econometrics and Statistics, Istanbul University, Faculty of Economics, vol. 0(38), pages 53-73, June.
    18. Schröder, Philipp J.H. & Jørgensen, Jan G., 2001. "Reductions in Real versus Tariff Barriers: The Effects on Industry Concentration," MPRA Paper 124, University Library of Munich, Germany.
    19. Auer, Raphael A. & Sauré, Philip, 2017. "Dynamic entry in vertically differentiated markets," Journal of Economic Theory, Elsevier, vol. 167(C), pages 177-205.
    20. Nigel Driffield, 2001. "Inward investment, industry concentration and the speed of adjustment," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 137(2), pages 193-214, June.

    More about this item

    Keywords

    concentration; sunk costs; R&D; stochastic frontiers;
    All these keywords.

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    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:pra:mprapa:1859. 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: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.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.