Price-Marginal Cost Relation, Industrial Concentration and External Competition: A Study for Chile
Keywords:
price-cost margin, industrial concentration, external competition, market power, Lerner index, ChileAbstract
This article studies the effect of entry barriers on industrial concentration and the effects of external competence and industrial concentration on the price-marginal cost relation. This is done by using a model that explicitly considers collusion among firms. Empirical results -based on the 1979 Chilean manufactured industrial census- show that entry barriers explain the degree of industrial concentration. For the consumer goods industry external opening -but not market structure- explains market power. In the case of the industrial goods industry, the level of imports exerts a direct impact on the price-marginal cost relation, suggesting that collusion between domestic and external producers is possible.Downloads
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Copyright (c) 1989 José Fuentes, Oscar Cristi
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