Inferring conduct under the threat of entry: the case of Brazilian cement industry
Autor(a) principal: | |
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Data de Publicação: | 2005 |
Tipo de documento: | Artigo |
Idioma: | eng |
Título da fonte: | Repositório Institucional do FGV (FGV Repositório Digital) |
Texto Completo: | http://hdl.handle.net/10438/12333 |
Resumo: | This paper demonstrates that when an industry faces potential entry and this threat of entry constrains pre-entry prices, cost and conduct are not identified from the comparative statics of equilibrium. In such a setting, the identifying assumption behind the well-established technique of relying on exogenous demand perturbations to empirically distinguish between alternative hypotheses of conduct is shown to fail. The Brazilian cement industry, where the threat of imports restrains market outcomes, provides an empirical illustration. In particular, pricecost margins estimated using this established technique are considerably biased downward, underestimating the degree of market power. A test of conduct is proposed, adapted to this constrained setting, which suggests that outcomes in the industry are collusive and characterised by market division. |
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Salvo, AlbertoEscolas::EPGEFGV2014-11-06T13:42:13Z2014-11-06T13:42:13Z2005-03-10http://hdl.handle.net/10438/12333This paper demonstrates that when an industry faces potential entry and this threat of entry constrains pre-entry prices, cost and conduct are not identified from the comparative statics of equilibrium. In such a setting, the identifying assumption behind the well-established technique of relying on exogenous demand perturbations to empirically distinguish between alternative hypotheses of conduct is shown to fail. The Brazilian cement industry, where the threat of imports restrains market outcomes, provides an empirical illustration. In particular, pricecost margins estimated using this established technique are considerably biased downward, underestimating the degree of market power. A test of conduct is proposed, adapted to this constrained setting, which suggests that outcomes in the industry are collusive and characterised by market division.engEscola de Pós-Graduação em Economia da FGVSeminários de pesquisa econômica da EPGETodo cuidado foi dispensado para respeitar os direitos autorais deste trabalho. Entretanto, caso esta obra aqui depositada seja protegida por direitos autorais externos a esta instituição, contamos com a compreensão do autor e solicitamos que o mesmo faça contato através do Fale Conosco para que possamos tomar as providências cabíveisinfo:eu-repo/semantics/openAccessConductMultimarket competitionMarket divisionLimit pricingCementEconomiaIndústria - Preços - Estudo de casosInferring conduct under the threat of entry: the case of Brazilian cement industryinfo:eu-repo/semantics/publishedVersioninfo:eu-repo/semantics/articlereponame:Repositório Institucional do FGV (FGV Repositório Digital)instname:Fundação Getulio Vargas (FGV)instacron:FGVORIGINAL000362396.pdf000362396.pdfapplication/pdf34214435https://repositorio.fgv.br/bitstreams/f00fead2-3a35-4a2b-b10e-ea7431a8f859/download12f11e6c399df49ac8a634834c0b9d30MD51LICENSElicense.txtlicense.txttext/plain; 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dc.title.eng.fl_str_mv |
Inferring conduct under the threat of entry: the case of Brazilian cement industry |
title |
Inferring conduct under the threat of entry: the case of Brazilian cement industry |
spellingShingle |
Inferring conduct under the threat of entry: the case of Brazilian cement industry Salvo, Alberto Conduct Multimarket competition Market division Limit pricing Cement Economia Indústria - Preços - Estudo de casos |
title_short |
Inferring conduct under the threat of entry: the case of Brazilian cement industry |
title_full |
Inferring conduct under the threat of entry: the case of Brazilian cement industry |
title_fullStr |
Inferring conduct under the threat of entry: the case of Brazilian cement industry |
title_full_unstemmed |
Inferring conduct under the threat of entry: the case of Brazilian cement industry |
title_sort |
Inferring conduct under the threat of entry: the case of Brazilian cement industry |
author |
Salvo, Alberto |
author_facet |
Salvo, Alberto |
author_role |
author |
dc.contributor.unidadefgv.por.fl_str_mv |
Escolas::EPGE |
dc.contributor.affiliation.none.fl_str_mv |
FGV |
dc.contributor.author.fl_str_mv |
Salvo, Alberto |
dc.subject.eng.fl_str_mv |
Conduct Multimarket competition Market division Limit pricing Cement |
topic |
Conduct Multimarket competition Market division Limit pricing Cement Economia Indústria - Preços - Estudo de casos |
dc.subject.area.por.fl_str_mv |
Economia |
dc.subject.bibliodata.por.fl_str_mv |
Indústria - Preços - Estudo de casos |
description |
This paper demonstrates that when an industry faces potential entry and this threat of entry constrains pre-entry prices, cost and conduct are not identified from the comparative statics of equilibrium. In such a setting, the identifying assumption behind the well-established technique of relying on exogenous demand perturbations to empirically distinguish between alternative hypotheses of conduct is shown to fail. The Brazilian cement industry, where the threat of imports restrains market outcomes, provides an empirical illustration. In particular, pricecost margins estimated using this established technique are considerably biased downward, underestimating the degree of market power. A test of conduct is proposed, adapted to this constrained setting, which suggests that outcomes in the industry are collusive and characterised by market division. |
publishDate |
2005 |
dc.date.issued.fl_str_mv |
2005-03-10 |
dc.date.accessioned.fl_str_mv |
2014-11-06T13:42:13Z |
dc.date.available.fl_str_mv |
2014-11-06T13:42:13Z |
dc.type.status.fl_str_mv |
info:eu-repo/semantics/publishedVersion |
dc.type.driver.fl_str_mv |
info:eu-repo/semantics/article |
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article |
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dc.identifier.uri.fl_str_mv |
http://hdl.handle.net/10438/12333 |
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http://hdl.handle.net/10438/12333 |
dc.language.iso.fl_str_mv |
eng |
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eng |
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Seminários de pesquisa econômica da EPGE |
dc.rights.driver.fl_str_mv |
info:eu-repo/semantics/openAccess |
eu_rights_str_mv |
openAccess |
dc.publisher.none.fl_str_mv |
Escola de Pós-Graduação em Economia da FGV |
publisher.none.fl_str_mv |
Escola de Pós-Graduação em Economia da FGV |
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reponame:Repositório Institucional do FGV (FGV Repositório Digital) instname:Fundação Getulio Vargas (FGV) instacron:FGV |
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