Measuring the Deviations from Perfect Competition: International Evidence

Weshah Razzak

MPRA Paper from University Library of Munich, Germany

Abstract: We use aggregated macroeconomic data for 43 countries to test the microeconomic condition for Perfect Competition, whereby the price level is equal to the marginal cost in the long run. We postulate two forms of Perfect Competition in the macro data: a weaker-form and a stronger-form. The former exists if the price level and the marginal cost share a common long-run trend; i.e., cointegrated. The latter exists if the market price and the marginal cost are equal in the long run.

Keywords: Perfect Competition; price level; marginal cost; time series; cointgration; nonparametric (search for similar items in EconPapers)
JEL-codes: C12 C13 C22 D01 D41 (search for similar items in EconPapers)
Date: 2023-12-29
New Economics Papers: this item is included in nep-com, nep-ind and nep-reg
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:119605

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