chapter  6
22 Pages

Identifying different regimes of competition CLEMENSKOOLANDMICHIEL vA NLEUvENSTEIJN

This chapter presents an empirical underpinning of the PCS-indicator. We examine in particular whether this indicator is able to distinguish different regimes of competition over time with respect to the American Sugar Refining Company 1890-1914. We use data from Genesove and Mullin (1998), which includes unique direct observations of marginal costs. Testimonies of the congressional hearings provide information on the level of competition. Genesove and Mullin (1998) validated the elasticity-adjusted Lerner index empirically. The analysis shows that the PCS indicator indeed indicates different regimes of competition and performs equally well as the elasticity-adjusted Lerner index for this application.