Firm characteristics and the ability to exercise market power: empirical evidence from the iron ore market
Timo Panke and
Heike Wetzel ()
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Timo Panke: University of Cologne
Empirical Economics, 2020, vol. 58, issue 5, No 8, 2223-2247
Abstract This paper empirically analyzes the existence of market power in the global iron ore market during the period from 1993 to 2012. Using an innovative stochastic frontier analysis approach, we investigate the relationship between individual firm characteristics, macroeconomic conditions and the individual ability of firms to generate markups in the global iron ore market. Our findings indicate that the markups on average amount to 20%. Moreover, location of the main production site and experience measured in years of production are identified to be the most important determinants of the magnitude of firm-specific markups.
Keywords: Estimation of market power; Lerner indices; Stochastic frontier analysis; Non-renewable resources (search for similar items in EconPapers)
JEL-codes: D22 L11 L72 (search for similar items in EconPapers)
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