Competition: Theoretical paramaterizations and empirical measures
Boone,J.
Boone,J.
Abstract
This paper proposes relative profits (RP) as a robust measure of competition. I consider nine different parameterizations of competition and show that more intense competition increases the profits of a firm relative to a less efficient firm. Further, popular competition measures like the price-cost margin (PCM) and Herfindahl index (H) can either increase or decrease in response to more intense competition. In this sense, RP is a more robust competition measure than PCM and H.
Description
Appeared earlier as CentER DP 2000-104 (revised title)
Date
2008
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Citation
Boone, J 2008, 'Competition : Theoretical paramaterizations and empirical measures', Journal of Institutional and Theoretical Economics, vol. 164, no. 4, pp. 587-611.