TY - JOUR
T1 - When is the price cost margin a safe way to measure changes in competition?
AU - Boone, J.
AU - van Ours, J.C.
AU - van der Wiel, H.P.
PY - 2013
Y1 - 2013
N2 - The price cost margin (PCM) is a popular way to measure competition. Although we know that this measure is not without problems, we actually do not know how often and under which conditions a change in PCM points in the wrong direction. We use a new competition measure, the profit elasticity, which is more robust than PCM. Our empirical analysis based on Dutch data shows that when competition changes the probability that PCM points in the wrong direction increases with industry concentration.
AB - The price cost margin (PCM) is a popular way to measure competition. Although we know that this measure is not without problems, we actually do not know how often and under which conditions a change in PCM points in the wrong direction. We use a new competition measure, the profit elasticity, which is more robust than PCM. Our empirical analysis based on Dutch data shows that when competition changes the probability that PCM points in the wrong direction increases with industry concentration.
U2 - 10.1007/s10645-012-9196-7
DO - 10.1007/s10645-012-9196-7
M3 - Article
SN - 0013-063X
VL - 161
SP - 45
EP - 67
JO - De Economist: Tijdschrift voor alle standen, tot bevordering van volkswelvaart, door verspreiding van eenvoudige beginselen van staatshuishoudkunde
JF - De Economist: Tijdschrift voor alle standen, tot bevordering van volkswelvaart, door verspreiding van eenvoudige beginselen van staatshuishoudkunde
IS - 1
ER -