This book presents, compares, and develops various techniques for estimating market power - the ability to set price profitably above marginal cost - and strategies - the game-theoretic plans used by firms to compete with rivals. The authors start by examining static model approaches to estimating market power. They extend the analysis to dynamic models. Finally, they develop methods to estimate firms' strategies directly and examine how these strategies determine market power. A detailed technical appendix reviews the relevant information-theoretic and other econometric models that are used throughout. Questions and detailed answers for students and researchers are provided in the book for easy use.
• Perloff is one of the best-known textbook writers in economics, he is co-author of the market leading textbook Modern Industrial Organization and author of Microeconomics • Shows how Information Theoretic Econometric Methods procedures, a new field of econometric analysis, can be used for estimating market power and strategies • Has problems and answer key in text itself
1. Introduction; 2. Structure-conduct-performance; 3. Industry models of market power; 4. Differentiated-product structural models; 5. Strategic reasons for a dynamic estimation model; 6. Dynamic games involving economic fundamentals; 7. Estimation of dynamic games involving economic fundamentals; 8. Estimation of market power using a linear-quadratic model; 9. Estimating strategies: theory; 10. Estimating strategies: case studies; Statistical appendix; Answers.
'… extremely well referenced throughout … This book would be of interest to those readers wishing to advance their knowledge and understanding of how econometrics can be used to investigate questions of market power.' Statistics in Society