Resolving the conflict on conduct parameter estimation in homogeneous goods markets between Bresnahan (1982) and Perloff and Shen (2012)

DOI10.1016/J.ECONLET.2023.111193zbMATH Open1521.91119arXiv2301.06665OpenAlexW4378550009MaRDI QIDQ6093733FDOQ6093733

Authors: Yuri Matsumura, Suguru Otani 

Publication date: 12 September 2023

Published in: Economics Letters (Search for Journal in Brave)

Abstract: We revisit conduct parameter estimation in homogeneous goods markets to resolve the conflict between Bresnahan (1982) and Perloff and Shen (2012) regarding the identification and the estimation of conduct parameters. We point out that Perloff and Shen's (2012) proof is incorrect and its simulation setting is invalid. Our simulation shows that estimation becomes accurate when demand shifters are properly added in supply estimation and sample sizes are increased, supporting Bresnahan (1982).

Full work available at URL: https://arxiv.org/abs/2301.06665

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zbMATH Keywords

Monte Carlo simulationmulticollinearity problemconduct parametershomogeneous goods market

Mathematics Subject Classification ID

Microeconomic theory (price theory and economic markets) (91B24)

Cites Work

• The oligopoly solution concept is identified
• Identification in Differentiated Products Markets Using Market Level Data
• Identification of the oligopoly solution concept in a differentiated-products industry

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