ESTIMATING MARKET POWER IN HOMOGENOUS PRODUCT MARKETS USING A COMPOSED ERROR MODEL: APPLICATION TO THE CALIFORNIA ELECTRICITY MARKET.
This study proposes a novel econometric approach to estimating market power in homogenous product markets. We use a composed error model to estimate the stochastic part of firms' strategic pricing equation. This part is formed by two random variables: a traditional error term, which captures random...
| Publicado en: | Economic Inquiry Vol. 56; no. 2; pp. 1296 - 1322 |
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| Autores principales: | , |
| Formato: | Artículo |
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Wiley-Blackwell
Apr2018
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| Acceso en línea: | Ver este registro en EBSCOhost |
| fields | @attributes: recordID: 1 pdfLink: plink: https://search.ebscohost.com/login.aspx?direct=true&db=ssf&AN=128133102&site=ehost-live header: @attributes: shortDbName: ssf uiTerm: 128133102 longDbName: Social Sciences Full Text (H.W. Wilson) uiTag: AN controlInfo: bkinfo: jinfo: jid: 00952583 EIQ jtl: Economic Inquiry issn: 00952583 maglogo: Y pubinfo: dt: Apr2018 vid: 56 iid: 2 pid: 480 pub: Wiley-Blackwell artinfo: ui: 128133102 10.1111/ecin.12539 ppf: 1296 ppct: 26 formats: fmt: – @attributes: type: T – @attributes: type: P size: 4.2MB tig: atl: ESTIMATING MARKET POWER IN HOMOGENOUS PRODUCT MARKETS USING A COMPOSED ERROR MODEL: APPLICATION TO THE CALIFORNIA ELECTRICITY MARKET. aug: au: Orea, Luis Steinbuks, Jevgenijs affil: Professor, Department of Economics, School of Economics and Business, University of Oviedo, 33006, Oviedo, Spain Economist, Development Research Group, The World Bank, Washington, DC, 20433. su: California Econometrics Market power Electric power distribution Pricing Random variables sug: subj: Econometrics California Electric Power Distribution Market power Electric power distribution Pricing Random variables ab: This study proposes a novel econometric approach to estimating market power in homogenous product markets. We use a composed error model to estimate the stochastic part of firms' strategic pricing equation. This part is formed by two random variables: a traditional error term, which captures random shocks, and a random conduct term, which measures the degree of market power. This approach allows for the conduct parameter to vary flexibly across firms and within firms over time, and avoids ad hoc structural restrictions for identifying firms' conduct. The empirical application of our approach is based on a well‐known California wholesale electricity market data set, which has been rigorously used to study market power. Our results suggest that realization of market power varies over both time and firms, and reject the assumption of a common or time‐invariant conduct parameter. (<italic>JEL</italic> C34, C51, L13, L94) pubtype: Academic Journal doctype: Article src: R language: English refInfo: copyright: @attributes: flag: N holdings: @attributes: islocal: N |
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