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Title:Empiricism meets theory: Is the Boone-Indicator applicable? PDF Logo
Authors:Schiersch, Alexander
Schmidt-Ehmcke, Jens
Issue Date:2010
Series/Report no.:Discussion papers // German Institute for Economic Research 1030
Abstract: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.
Subjects:Competition
Boone-Indicator
Cartels
Census Data
JEL:L12
L41
D43
Document Type:Working Paper
Appears in Collections:DIW-Diskussionspapiere
Publikationen von Forscherinnen und Forschern des DIW

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