Long-run Equilibrium in the Empirical Study of Monopoly and Competition

Mark Glick and Hans Ehrbar

Economic Inquiry, 1990, vol. 28, issue 1, 151-62

Abstract: A long-run tendency of industry profit rates to converge to a single competitive level has been a fundamental tenet of the industrial organization approach to the study of competitiveness in a market economy. This paper shows that for the post-World War II period a weak equalization can be econometrically identified with different reaction speeds by industry. However, persistent profit rate differences endure. Finally, a portfolio theory of risk is considered as an explanation of these differentials. Copyright 1990 by Oxford University Press.

Date: 1990
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