EconPapers    
Economics at your fingertips  
 

When is the Price Cost Margin a Safe Way to Measure Changes in Competition?

Jan Boone, Jan van Ours () and Henry Wiel

De Economist, 2013, vol. 161, issue 1, 45-67

Abstract: 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. Copyright Springer Science+Business Media New York 2013

Keywords: Competition; Profit elasticity; Price cost margin; Measures of competition; Concentration; D43; L13 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10) Track citations by RSS feed

Downloads: (external link)
http://hdl.handle.net/10.1007/s10645-012-9196-7 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:kap:decono:v:161:y:2013:i:1:p:45-67

Ordering information: This journal article can be ordered from
http://www.springer. ... cs/journal/10645/PS2

Access Statistics for this article

De Economist is currently edited by Rob Alessie, Bas ter Weel, Casper van Ewijk, Jan C. van Ours and Frank de Jong

More articles in De Economist from Springer
Bibliographic data for series maintained by Sonal Shukla ().

 
Page updated 2019-08-22
Handle: RePEc:kap:decono:v:161:y:2013:i:1:p:45-67