Market concentration measures and investment decisions in Mexican manufacturing firms

Celina Lopez-Mateo and Antonio Ruiz-Porras

MPRA Paper from University Library of Munich, Germany

Abstract: We study how alternative measures of market concentration may explain investment decisions of Mexican manufacturing firms. The measures include the Herfindahl-Hirschman Index and the Dominance one. The first one is the traditional measure of market structure concentration. The Dominance Index is a competition measure used by Mexican regulators. The econometric assessments suggest that investment decisions of Mexican firms can be better explained by the Dominance Index measure than by the Herfindahl-Hirschman one. Thus our results suggest that the Mexican Dominance Index might be useful as a measure of market structure and competition. Such conclusion is based on several econometric assessments. In all cases we use certain characteristics of the firms (size, cash flows, investment opportunities and capital intensity) as control variables.

Keywords: Investment; Dominance Index; Herfindahl-Hirschman Index; Manufacturing; Mexico (search for similar items in EconPapers)
JEL-codes: L22 L40 L60 (search for similar items in EconPapers)
Date: 2010-02-17
New Economics Papers: this item is included in nep-com and nep-dev
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https://mpra.ub.uni-muenchen.de/24792/1/MPRA_paper_24792.pdf revised version (application/pdf)

Related works:
Journal Article: MARKET CONCENTRATION MEASURES AND INVESTMENT DECISIONS IN MEXICAN MANUFACTURING FIRMS (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:23182

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