Template-type: ReDIF-Paper 1.0
Author-Name: Donghun Kim
Author-Name-First: Donghun
Author-Name-Last: Kim
Author-Workplace-Name: International University of Japan
Author-Workplace-Homepage: http://www.iuj.ac.jp/
Title: Measuring Market Power in a Dynamic Oligopoly Model: The Dallas-Forth Worth Milk Market Case
Abstract: We derive a dynamic structural model based on a dynamic supergame model and measure market power for the Dallas-Forth Worth milk market in the U.S. In particular, we analyze the cyclical behavior of firm conduct and evaluate bias in static market-power measures in a unified manner by deriving and estimating a dynamic first-order condition for profit maximization. We find that firm conduct in the Dallas-Forth Worth milk market is countercyclical against demand shocks and expected future cost shocks. We also demonstrate that the conduct parameter in a static model underestimates true market power if firms' behaviors are posited by a dynamic supergame.
Classification-JEL: D4, L0, Q0
Length: 22 pages
Creation-Date: 2006-01
Number: EMS_2006_06
File-URL: https://www.iuj.ac.jp/workingpapers/index.cfm?File=EMS_2006_06.pdf
File-Format: Application/pdf
File-Function: First version, 2006
File-Size: 117KB
Keywords: Dallas-Fort Worth Milk Market, Conduct Parameter, Dynamic Supergame, Market Power, Collusion
Handle: RePEc:iuj:wpaper:EMS_2006_06