MARKET CONCENTRATION MEASURES AND INVESTMENT DECISIONS IN MEXICAN MANUFACTURING FIRMS

Antonio Ruiz-Porras and Celina López-Mateo

Accounting & Taxation, 2010, vol. 2, issue 1, 59-69

Abstract: We study how different measures of market concentration explain investment decisions of Mexican manufacturing firms. The Herfindahl-Hirschman Index is the traditional measure of market structure concentration. The Dominance Index is a competition measure used by Mexican regulators. The econometric assessments suggest that investment decisions of Mexican firms can be better explained by the Dominance Index than by the Herfindahl-Hirschman Index. Thus our results suggest that the Mexican Dominance Index might be useful as a measure of market structure and competition. The results also suggest that market concentration reduces investment. These conclusions are based on several econometric assessments.

JEL-codes: L22 L40 L60 (search for similar items in EconPapers)
Date: 2010
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Working Paper: Market concentration measures and investment decisions in Mexican manufacturing firms (2010)
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