On the specification of structure-performance relationships

Malcolm Sawyer ()

European Economic Review, 1982, vol. 17, issue 3, 295-306

Abstract: This paper argues that most estimated structure-profitability equations in industrial economics have not been derived from a single coherent view of the behaviour of firms. The independent variables in such equations have often been derived on the basis of a literature search and by appeal to conflicting approaches (e. g. constrained and unconstrained profit maximisation). The use of a coherent approach indicates that structure-performance equations are likely to be highly non-linear, and that simultaneous equation estimation is neither required nor appropriate. In some cases single-equation estimation is adequate, and in other cases reduced form equations are needed.

Date: 1982
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Persistent link: https://EconPapers.repec.org/RePEc:eee:eecrev:v:17:y:1982:i:3:p:295-306

DOI: 10.1016/S0014-2921(82)80065-2

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