Monday, April 15, 2013
Posted by D. Daniel Sokol
Zhifeng Gao (University of Florida) and Charles Moss (University of Florida) are Testing Market Power with Profit Functions: a Dual Approach with Normalized Quadratic.
ABSTRACT: The dual relationship between parameters of normalized quadratic cost and profit functions is determined when firms can implement market power on the output market. An approach is developed to test the market power by comparing the profits of a firm with and without market power. Simulations demonstrate the efficiency of this approach.