An empirical illustration of an alternative approach to measuring the market power and high profits hypothesis

Otto Andersen and Marjo-Riitta Rynning

International Journal of Industrial Organization, 1991, vol. 9, issue 2, 239-249

Abstract: This paper discusses the problems of testing the structure-profit relationship, and presents an alternative approach to measuring the market power and profitability hypothesis. The results from an empirical study on firm level indicate that firms in a monopoly situation can maintain a high profitability, if and only if there are extensive barriers to entry. There seems, however, not to be a general linear relationship between concentration and profitability, which has been a common assumption in many empirical studies in this area.

Date: 1991
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Persistent link: https://EconPapers.repec.org/RePEc:eee:indorg:v:9:y:1991:i:2:p:239-249

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