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Review of Industrial Organization

, Volume 10, Issue 4, pp 465–485 | Cite as

Can market power be estimated?

  • Charles E. Hyde
  • Jeffrey M. Perloff
Article

Abstract

Simulation experiments demonstrate the strengths and weaknesses of the Panzar-Rosse, Hall, and structural approaches to estimating or testing market power. The structural model works well only if it is properly specified. The Hall methods works well in industries with constant retums to scale (CRS); however, even slight deviations from CRS lead to serious biases. Although easier to use than the structural approach, the Panzar-Rosse approach cannot distinguish between collusion and competition for some technologies. Some empirical applications of the Hall and Panzar-Rosse methods are provided.

Key words

Market power estimation simulations 

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Copyright information

© Kluwer Academic Publishers 1995

Authors and Affiliations

  • Charles E. Hyde
    • 1
  • Jeffrey M. Perloff
    • 2
  1. 1.University of MelbourneAustralia
  2. 2.University of CaliforniaBerkeleyU.S.A.

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