Interdependent Pricing and Markup Behavior : an Empirical Analysis of GM, Ford and Chrysler

Author / Creator

Berndt, Ernst R

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Online

Summary

Abstract: Our purpose in this paper is to develop and estimate a model of the US. Abstract: automobile industry that can be used to analyze the secular and cyclical. Abstract: strategic markup beha...

Abstract: Our purpose in this paper is to develop and estimate a model of the US.

Abstract: automobile industry that can be used to analyze the secular and cyclical.

Abstract: strategic markup behavior and market structure of its three major domestic.

Abstract: producers - - GM, Ford and Chrysler. The principal novelty in this paper is.

Abstract: not such much in the underlying theory (we build on what Timothy Bresnahan has.

Abstract: called the "new empirical industrial organization" literature), but rather in.

Abstract: the actual empirical implementation of a multi-equation model sufficiently.

Abstract: general to permit the testing of a variety of specific behavioral postulates.

Abstract: associated with the interdependent strategic profit-maximizing behavior of GM.

Abstract: Ford and Chrysler.

Abstract: Using firm-specific annual data from 1959-83, we find that at usual.

Abstract: levels of statistical significance, we cannot reject Cournot quantity-setting.

Abstract: behavior, nor can we reject leader/follower quantity-setting behavior with GM.

Abstract: as leader and Ford and Chrysler as followers; the parameter restrictions.

Abstract: associated with leader/follower behavior are slightly more binding than those.

Abstract: with Cournot, although the difference is not decisive. In terms of the.

Abstract: cyclical analysis of market behavior, our most striking result is the great.

Abstract: diversity of behavior we find among GM, Ford and Chrysler. Depending on which.

Abstract: firm is being analyzed, there is support for the pro-cyclical "conventional

Abstract: wisdom" of markups (GM and Ford), as well as for the counter-cyclical

Abstract: "revisionist" literature (Chrysler). Diversity, rather than constancy and.

Abstract: homogeneity, best characterizes firms in this industry.

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