A New Way to Measure Competition

Jan Boone

No 4330, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: This Paper introduces a new way to measure competition based on firms' profits. Within a general model, we derive conditions under which this measure is monotone in competition, where competition can be intensified both through a fall in entry barriers and through more aggressive interaction between players. The measure is shown to be theoretically more robust than the price cost margin. This allows for an empirical test of the problems associated with the price cost margin as a measure of competition.

Keywords: Competition; Measures of competition; Price cost margin; Variable profits (search for similar items in EconPapers)
JEL-codes: D43 L13 (search for similar items in EconPapers)
Date: 2004-03
New Economics Papers: this item is included in nep-acc, nep-com and nep-mic
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Citations: View citations in EconPapers (51)

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Journal Article: A New Way to Measure Competition (2008)
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