search query: @indexterm Industries / total: 1556
reference: 499 / 1556
| Author: | Röller, L-H. Sickles, R.C. |
| Title: | Capacity and product market competition: Measuring market power in a 'puppy-dog' industry |
| Journal: | International Journal of Industrial Organization
2000 : AUG, VOL. 18:6, p. 845-865 |
| Index terms: | Game theory Capacity Competition Markets Industries Pricing Policy Economic theory Models |
| Language: | eng |
| Abstract: | In this paper, a structural model is specified and estimated accounting for competition in 2 variables: capacity and prices. The model has a 2-stage setup. In the first stage firms make capacity decisions followed by a product-differentiated, price setting game in the second stage. Since costs are endogenized through the first stage, this has important implications for the measurement of market power in the product market. Particularly, simpler 1-stage specifications would result in a bias in the measurement of market power, which can be linked to the taxonomy for 2-stage games given in Fudenberg and Tirole (1984). This model is estimated - demand, cost and conduct for the European Airline Industry using data for the period of 1976-1990. It is found among others that some degree of market power in the product market exists. However, market conduct in the 2-stage set-up is significantly less collusive than in the more widely employed 1-stage specification. |
SCIMA