Testable implications for the Bresnahan-Lau model of market competition

Laurens Cherchye, Thomas Demuynck and Bram De Rock

Working Papers of Department of Economics, Leuven from KU Leuven, Faculty of Economics and Business (FEB), Department of Economics, Leuven

Abstract: We derive necessary and sufficient testable implications on the reduced form price and quantity functions for the Bresnahan-Lau model of market competition. The conditions are twofold. A first condition relates to the fact that the reduced form price function should correspond to an inverse demand function. The second condition captures that the degree of competition must be invariant to changes in the exogenous variables.

Date: 2010-04
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Persistent link: https://EconPapers.repec.org/RePEc:ete:ceswps:ces10.11

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