arXiv subjects

Yuri Matsumura

Publications and source records attributed to Yuri Matsumura.

4 recordsLinked to original sources

arXiv2026

Revisiting the Identification of the Conduct Parameter in Homogeneous Goods Markets

We revisit the identification of the conduct parameter in homogeneous goods markets. Lau (1982) argues that the conduct parameter is not identified if and only if the inverse demand function is separable, except for a specific separable function. This result has been regarded as an extension of the result in Bresnahan (1982) to more general settings. However, we show that Lau's claim is incorrect and provide a new characterization of the non-identification. Our characterization shows that a demand function with demand rotation instruments is the necessary and sufficient condition for the identification of the conduct parameter. Therefore, our result properly generalizes the role of demand rotation instruments in identifying the conduct parameter, as highlighted by Bresnahan (1982), to more general settings.

econ.EM↗

arXiv2025

Conduct Parameter Estimation in Homogeneous Goods Markets with Equilibrium Existence and Uniqueness Conditions: The Case of Log-linear Specification

We propose a constrained generalized method of moments (GMM) estimator with some equilibrium uniqueness conditions for estimating the conduct parameter in a log-linear model with homogeneous goods markets. Monte Carlo simulations demonstrate that merely imposing parameter restrictions leads to not just inaccurate estimations but also some numerical issues, and adding the equilibrium uniqueness conditions resolves them. We also suggest a formulation of the GMM estimation to further avoid the numerical issues.

econ.EM↗

arXiv2024

Challenges in Statistically Rejecting the Perfect Competition Hypothesis Using Imperfect Competition Data

We theoretically prove why statistically rejecting the null hypothesis of perfect competition is challenging, known as a common problem in the literature. We also assess the finite sample performance of the conduct parameter test in homogeneous goods markets, showing that statistical power increases with the number of markets, a larger conduct parameter, and a stronger demand rotation instrument. However, even with a moderate number of markets and five firms, rejecting the null hypothesis of perfect competition remains difficult, irrespective of instrument strength or the use of optimal instruments. Our findings suggest that empirical results failing to reject perfect competition are due to the limited number of markets rather than methodological shortcomings.

econ.EM↗

arXiv2023

Resolving the Conflict on Conduct Parameter Estimation in Homogeneous Goods Markets between Bresnahan (1982) and Perloff and Shen (2012)

We revisit conduct parameter estimation in homogeneous goods markets to resolve the conflict between Bresnahan (1982) and Perloff and Shen (2012) regarding the identification and the estimation of conduct parameters. We point out that Perloff and Shen's (2012) proof is incorrect and its simulation setting is invalid. Our simulation shows that estimation becomes accurate when demand shifters are properly added in supply estimation and sample sizes are increased, supporting Bresnahan (1982).

econ.EM↗