Abstract
One role of empirical work in industrial organization is to identify non-competitive markets and to measure the degree of market power, or the extent to which prices differ from marginal costs. There are two basic approaches in the empirical literatüre, which traditional structure-con-duct-performance (SCP) and new empirical industrial organisation ~ (NEIO). This paper investigates this two approaches in the empirical literatüre. The SCP approach assumes that there is a stable, causal rela-tionship between the structure of an industry, firm conduct, and market performance. Since this relationship is assumed to be stable, a direct link betvveen the two sets ofmore easily observed variables, structure and performance, is usually assumed. The complexity of firm conduct and its determinants in many markets, problems with interpretation, measure-ment errors conceptual dijficulties sugget that SCP studies are unlikely to establish convincing causal or structural relationships between struture and performance variables across industries. The new empirical approach has instead emphasized understanding firm conduct or behav-ior in particular industries.
Details
| Other ID | JA89RK48EC |
|---|---|
| Journal Section | Articles |
| Authors | |
| Publication Date | December 1, 2004 |
| Published in Issue | Year 2004 Volume: 6 Issue: 2 |