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Title: |
Methodological Extensions of First-Order Adjustment Models: An
Application to U.S. Industries |
| Author: |
Jo, Sunghan |
| Author
Affiliation: |
Korea Energy
Econ Institute |
| Source: |
International Economic Journal, Summer 2000, v. 14, no. 2, pp. 85-111 |
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Publication Date: |
Summer 2000 |
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Abstract: |
This paper empirically tests two
industrial-organization models with a sample of 182 U.S. industries,
from 1963 to 1967. The models extend standard models and integrate them
with dynamics associated with the "persistence of profits"
methodologies. We extend it by replacing the traditional cross-section
profit equation with a profit-adjustment equation for U.S. industrial
data. Our study measures the speed of adjustment of profits and
explicitly models steady-state profits, in addition to the speed of
structural adjustment and steady-state market structure. We find that
the structural-adjustment speed is slower than the profit-adjustment
speed and that nonzero economic profits tend to be quite persistent. |
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