PARAMETRIC AND NONPARAMETRIC MARKET POWER TESTS: AN EMPIRICAL INVESTIGATION

Parametric and nonparametric market power tests most commonly used to assess imperfectly competitive behavior are identified. Monte Carlo experiments are used to assess the accuracy of eight nonparametric tests. The results are compared to Raper, Love, and Shumway's (1997) findings concerning three parametric market power tests in the Bresnahan-Lau tradition. Both monopolistic and monopsonistic market power tests are implemented using data from 10 known market structures. Only two of the nonparametric market power tests distinguish between market structures adequately. The parametric tests perform well, although functional form bias is not investigated in this study.


Issue Date:
1998
Publication Type:
Conference Paper/ Presentation
PURL Identifier:
http://purl.umn.edu/20875
Total Pages:
22
Series Statement:
Selected Paper




 Record created 2017-04-01, last modified 2017-08-24

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