Revisiting the Identification of the Conduct Parameter in Homogeneous Goods Markets

Yuri Matsumura and Suguru Otani

Papers from arXiv.org

Abstract: We revisit the identification of the conduct parameter in homogeneous goods markets. Lau (1982) argues that the conduct parameter is not identified if and only if the inverse demand function is separable, except for a specific separable function. This result has been regarded as an extension of the result in Bresnahan (1982) to more general settings. However, we show that Lau's claim is incorrect and provide a new characterization of the non-identification. Our characterization shows that a demand function with demand rotation instruments is the necessary and sufficient condition for the identification of the conduct parameter. Therefore, our result properly generalizes the role of demand rotation instruments in identifying the conduct parameter, as highlighted by Bresnahan (1982), to more general settings.

Date: 2024-10, Revised 2025-11
New Economics Papers: this item is included in nep-ecm
References: View complete reference list from CitEc
Citations:

Downloads: (external link)
http://arxiv.org/pdf/2410.16998 Latest version (application/pdf)

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:arx:papers:2410.16998

Access Statistics for this paper

More papers in Papers from arXiv.org
Bibliographic data for series maintained by arXiv administrators ().