APPROACHES AND METHODS FOR THE ECONOMETRIC ANALYSIS OF MARKET POWER: A SURVEY AND EMPIRICAL COMPARISON

This study discusses two widely used approaches in the New Empirical Industrial Organization (NEIO) literature and examines the strengths and weaknesses of the Production-Theoretic Approach (PTA) and the General Identification Method (GIM) for the econometric analysis of market power in agricultural and food markets. We provide a framework that may help researchers to evaluate and improve structural models of market power. Starting with the specification of the approaches in question, we compare published empirical studies of market power with respect to the choice of the applied approach, functional forms, estimation methods and derived estimates of the degree of market power. Thereafter, we use our framework to evaluate several structural models based on PTA and GIM to measure oligopsony power in the Ukrainian dairy industry. The PTA-based results suggest that the estimated parameters of oligopsony power are significantly different from zero, while GIM-based results do not indicate any evidence of oligopsony market power in the Ukrainian dairy industry. Moreover, estimations results vary substantially due to the employed estimation procedure.     

A REVIEW AND COMPARISON OF TESTS OF CROSS-SECTION INDEPENDENCE IN PANELS

Abstract.  In this paper we review and compare diagnostic tests of cross-section independence in the disturbances of panel regression models. We examine tests based on the sample pairwise correlation coefficient or on its transformations, and tests based on the theory of spacings. The ultimate goal is to shed some light on the appropriate use of existing diagnostic tests for cross-equation error correlation. Our discussion is supported by means of a set of Monte Carlo experiments and a small empirical study on health. Results show that tests based on the average of pairwise correlation coefficients work well when the alternative hypothesis is a factor model with non-zero mean loadings. Tests based on spacings are powerful in identifying various forms of strong cross-section dependence, but have low power when they are used to capture spatial correlation.     

THE STRUCTURE OF ECONOMETRIC ANALYSIS

Books reviewed in this article:
C. W. J. Granger, ed. (1990) Modelling Economic Series: Readings in Econometric Methodology. Oxford:
L. G. Godfrey (1988) Misspecification Tests in Econometrics: The Lagrange Multiplier Principle and Other Approaches. Cambridge:
Denis Sargan (Meghnad Desai, ed.) (1988) Lectures on Advanced Econometric Theory. Oxford:     

ECONOMETRIC MODELS OF ASYMMETRIC PRICE TRANSMISSION

Abstract In this paper, we review the existing empirical literature on price asymmetries in commodities, providing a way to classify and compare different studies that are highly heterogeneous in terms of econometric models, type of asymmetries and empirical findings. Relative to the previous literature, this paper is novel in several respects. First, it presents a detailed and updated survey of the existing empirical contributions on price asymmetries in the transmission mechanism linking input prices to output prices. Second, this paper presents an extension of the traditional distinction between long‐run and short‐run asymmetries to new categories of asymmetries, such as: contemporaneous impact, distributed lag effect, cumulated impact, reaction time, equilibrium and momentum equilibrium adjustment path, regime effect, regime equilibrium adjustment path. Each empirical study is then critically discussed in the light of this new classification of asymmetries. Third, this paper evaluates the relative merits of the most popular econometric models for price asymmetries, namely autoregressive distributed lags, partial adjustments, error correction models, regime switching and vector autoregressive models. Finally, we use the meta‐regression analysis to investigate whether the results of asymmetry tests are not model‐invariant and find which additional factors systematically influence the rejection of the null hypothesis of symmetric price adjustment. The main results of our survey can be summarized as follows: (i) each econometric model is specialized to capture a subset of asymmetries; (ii) each asymmetry is better investigated by a subset of econometric models; (iii) the general significance of the F test for asymmetric price transmission depends mainly on characteristics of the data, dynamic specification of the econometric model, and market characteristics. Overall, our empirical findings confirm that asymmetry, in all its forms, is very likely to occur in a wide range of markets and econometric models.     

BUSINESSMEN AND BUSINESS SCHOOL FACULTY: A COMPARISON OF VALUE SYSTEMS

Seventeen faculty members at a European business school scored two values tests, L. V. Gordon's S.I.V. and S.P.V. Their scores are compared to those of 372 executive course participants in general, to those of sixteen American participants in particular, and to those of participants who were rated by the faculty as top performers in class. Results show faculty to differ significantly from participants toward more academic values and less will to manage, and this being a role rather than a nationality difference. Results also show that faculty members evaluate most highly participants with value profiles largely similar to theirs, but higher in ‘Leadership’ and relatively low in ‘Independence’. These data are considered as a demonstration of the type of organizational socialization which businessmen undergo when they participate in a campus course.     

THE ECONOMETRIC ANALYSIS OF ECONOMIC POLICY

The application of econometric analysis to the process of economic policy formulation is considered. A framework is provided by the theory of reduction, specifically reductions where key information losses would invalidate policy. Consequently, model evaluation; the role of econometric models; forecasting; exogeneity; causality; constancy and invariance; unobservables; seasonality; and data integrability are considered, together with specific policy issues where econometrics can clarify the problems.     

PATENTS,R&D,AND TECHNOLOGICAL SPILLOVERS AT THE FIRM LEVEL: SOME EVIDENCE FROM ECONOMETRIC COUNT MODELS FOR PANEL DATA

This paper analyses the relationship between the main determinants of technological activity and patent applications. To this end, an original panel of 181 international manufacturing firms investing substantial amounts in R&D during the late 1980s has been constructed. The number of patent applications by firms is explained by current and lagged levels of R&D expenditures and technological spillovers. Technological and geographical opportunities are also taken into account as additional determinants. In order to examine this relationship, several econometric models for count panel data are estimated. These models deal with the discrete nature of patents and firm specific unobservables arising from the panel data context. The main findings of the paper are first, a high sensitivity of results to the specification of patent distribution. Second, the estimates of the preferred GMM panel data method suggest decreasing returns to scale in technological activity and finally a positive impact of technological spillovers on firm's own innovation. © 1997 John Wiley & Sons, Ltd.     

TESTING PARAMETER CONSTANCY AND SUPER EXOGENEITY IN ECONOMETRIC EQUATIONS

The paper is concerned with testing super exogeneity in a single equation that can either be linear or partially nonlinear. A joint test for testing both weak exogeneity and a form of invariance, which together amount to a form of super exogeneity, is presented and its properties discussed. The considerations also include testing parameter constancy and modelling parameter nonconstancy by an example in which testing super exogeneity in a consumption function for Norway, based on a previously published model is considered. The results are compared with the previous conclusions and found not to disagree with them.