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Firm characteristics and the ability to exercise market power: empirical evidence from the iron ore market

  • Robert GermeshausenEmail author
  • Timo Panke
  • Heike Wetzel
Article
  • 69 Downloads

Abstract

This paper empirically analyzes the existence of market power in the global iron ore market during the period from 1993 to 2012. Using an innovative stochastic frontier analysis approach, we investigate the relationship between individual firm characteristics, macroeconomic conditions and the individual ability of firms to generate markups in the global iron ore market. Our findings indicate that the markups on average amount to 20%. Moreover, location of the main production site and experience measured in years of production are identified to be the most important determinants of the magnitude of firm-specific markups.

Keywords

Estimation of market power Lerner indices Stochastic frontier analysis Non-renewable resources 

JEL Classification

D22 L11 L72 

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Copyright information

© Springer-Verlag GmbH Germany, part of Springer Nature 2018

Authors and Affiliations

  1. 1.Centre for European Economic Research (ZEW) MannheimMannheimGermany
  2. 2.Institute of Energy EconomicsUniversity of CologneCologneGermany
  3. 3.Institute of EconomicsUniversity of KasselKasselGermany

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