Empiricism meets theory: Is the Boone-Indicator applicable?

Arbeitspapier

Boone (2008a) proposes a new competition measure based on Relative Profit Differences (RPD) with superior theoretical properties. However, the empirical applicability and robust-ness of the Boone-Indicator is still unknown. This paper aims to address that question. Using a rich, newly built, data set for German manufacturing enterprises, we test the empirical valid-ity of the Boone-Indicator using cartel cases. Our analysis reveals that the traditional regres-sion approach of the indicator fails to correctly indicate competition. A proposed augmented indicator based on RPDs performs better. The traditional Lerner-Index is still the only meas-ure that correctly indicates the expected competitive changes.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: DIW Discussion Papers ; No. 1030

Classification and Topics

• Classification: Wirtschaft ; Monopoly; Monopolization Strategies ; Monopolization; Horizontal Anticompetitive Practices ; Market Structure, Pricing, and Design: Oligopoly and Other Forms of Market Imperfection
• Subject: Competition ; Boone-Indicator ; Cartels ; Census Data

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Schiersch, Alexander ; Schmidt-Ehmcke, Jens
• Event: Veröffentlichung
• (who): Deutsches Institut für Wirtschaftsforschung (DIW)
• (where): Berlin
• (when): 2010

Further information

• Handle: http://hdl.handle.net/10419/46202
• Last update: 10.03.2025, 11:43 AM CET