The Persistence of Profits in the Long Run: A New Approach

John Cable and Richard Jackson

International Journal of the Economics of Business, 2008, vol. 15, issue 2, pages 229-244

Abstract: We present a trend-based alternative to the standard first-order autoregression model in persistence of profits studies. This is motivated by reservations over the interpretation of the standard model, and rests on a different concept of dynamic competition. A nine-category taxonomy of long-run persistence stereotypes is developed. Structural time series estimates are presented for a sample of UK companies. We find the null of long run competitive equilibrium not rejected in nearly a third of cases, but non-eroding persistence to be present in around 60%.

Keywords: Profit persistence; Competition; Structural Time Series (search for similar items in EconPapers)
Date: 2008

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Persistent link: http://EconPapers.repec.org/RePEc:taf:ijecbs:v:15:y:2008:i:2:p:229-244

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