Industrial Market Structure and Economic Performance
Industrial Market Structure and Economic Performance

Author: Frederic M. Scherer

Publisher:

Published: 1990

Total Pages: 744

ISBN-13:

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This text has been revised to reflect theoretical, empirical, and policy developments of the past decade. New insights into strategic behaviour from game theory are given attention. The chapters on antitrust policy have been integrated with the related theoretical materials.

Price Movements Over the Business Cycle in Us. Manufacturing Industries
Price Movements Over the Business Cycle in Us. Manufacturing Industries

Author: Federal Trade Federal Trade Commission

Publisher: CreateSpace

Published: 2015-06-01

Total Pages: 54

ISBN-13: 9781514157275

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This study develops and tests implications of an oligopoly pricing model. The model involves capacity investments that are made before demand is revealed and pricing decisions that are made after demand is known. The model predicts that during a demand expansion the short run competitive price is a pure strategy Nash equilibrium, but in a recession firms set prices above the competitive price. Thus, price markups over the competitive price are countercyclical. Prices set during a recession are more variable than prices set during expansionary periods, because firms use mixed strategies for prices in recessions. This model is confronted with data from U.S. manufacturing industries. The empirical analysis utilizes a time series switching regime filter to test the unique predictions of the model, namely that (1) price changes are more variable in recessions than in expansions and (2) the form of the distribution of price changes differs between recessionary and expansionary regimes. Fourteen out of fifteen industries have fluctuations consistent with this oligopoly pricing model. The data is also analyzed to compare the predictions of this model with those of an optimal collusion model.