ABSTRACT
Firm interdependence has been hypothesized to be a function of intermarket, as well as intramarket, contacts among an industry’s firms. Three measures of firm interdependence — horizontal, vertical seller and vertical buyer — were derived and estimated to capture the interdependence arising from the intermarket relationships among an industry’s firms. In Chapters IV and V, these measures of interdependence were introduced separately in the three-equation model of price-cost margins. In this chapter all three measures are introduced into the model simultaneously. This makes it possible to estimate the total relationship between firm interdependence and price-cost margins.
