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Journal of Consumer Policy

, Volume 15, Issue 3, pp 275–293 | Cite as

On estimating market efficiency

  • Brian T. Ratchford
  • Pola Gupta
Articles

Abstract

In this paper, we discuss commentaries by Maynes and Hjorth-Andersen on our earlier paper (1990), and then go on to discuss the merits of various measures of market efficiency which have appeared in the literature. While Maynes criticized the model in our 1990 paper for a lack of realism, we argue that our limited objective of demonstrating that price-quality correlations are not necessarily related to market efficiency did not require a model which was realistic in all details. We also demonstrate that our basic conclusion that the price-quality correlation need not measure market efficiency does not depend on our theoretical model. Hjorth-Andersen advanced a number of alternative reasons why price-quality correlations may not measure efficiency, and we view his arguments largely as complementary to ours. The basic conclusion is that there are severe problems with interpreting measured price-quality correlations as measures of efficiency. We go on to discuss alternative measures. While no alternatives are completely satisfactory, we argue that measures based on deviations from an efficient frontier have some attractive properties, and are currently the most desirable alternative.

Keywords

Theoretical Model Economic Policy Early Paper Alternative Measure Severe Problem 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

Zur bestimmung der effizienz von mÄrkten

Zusammenfassung

Die Autoren gehen in diesem Beitrag auf die Kommentare von Maynes (1992) und Hjorth-Andersen (1992) zu ihrem früheren Beitrag in dieser Zeitschrift (1990) ein und diskutieren dann die verschiedenen Indikatoren der Markteffizienz, die in der Literatur vorgeschlagen wurden. WÄhrend Maynes das Modell des früheren Beitrages der Autoren wegen zu geringer RealitÄtsnahe kritisierte, halten die Autoren jetzt dagegen, da\ für das begrenzte Ziel jenes Beitrages, nÄmlich zu zeigen, da\ Preis-QualitÄts-Korrelationen nicht notwendigerweise mit Marktef-fizienz verknüpft sind, Wirklichkeitstreue in allen Details gar nicht erforderlich ist. Sie zeigen darüber hinaus, da\ ihre grundlegende Schlu\folgerung, da\ Preis-QualitÄts-Korrelationen nicht ein Ma\ der Markteffizienz sein müssen, von ihrem theoretischen Modell nicht einmal abhÄngt. Hjorth-Andersen führt eine Reihe weiterer Gründe an, deretwegen Preis-QualitÄts-Korrelationen keine Indikatoren für Effizienz sein mögen, die von den Autoren als ErgÄnzung der eigenen überlegungen angesehen werden. Das Hauptergebnis des vorliegenden Beitrages ist folglich, da\ es ernste Probleme bei der Interpretation solcher Korrelationen als Effizienz-Ma\e gibt. Sie diskutieren deshalb andere Indikatoren, von denen allerdings keiner vollstÄndig befriedigend ist. Allerdings dürften Ma\e, die die Abweichung von einer Grenzlinie günstigster EinkÄufe erfassen, zur Zeit die aussichtsreichste Möglichkeit sein.

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Copyright information

© Kluwer Academic Publishers 1992

Authors and Affiliations

  • Brian T. Ratchford
    • 1
  • Pola Gupta
    • 2
  1. 1.MarketingState University of New York at BuffaloBuffaloUSA
  2. 2.MarketingUniversity of Northern IowaCedar FallsUSA

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