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- Title
Is there a causal effect of concentration on persistent profitability differentials?
- Authors
Keil, Jan
- Abstract
This article searches for a causal effect of industry concentration on estimates of persistent profitability differentials. I offer solutions to identification problems that plague related analyses by applying an IV and a natural experiment. This is the first study that explains estimates of persistent profit differentials using business segments data, allowing to match micro- and industry-level data more consistently. Testing linear relations, critical concentration levels, and interactions with mobility barriers, I find no evidence that concentration has any positive effect on long-run profitability differences. Results rather tend to point to a statistically and economically significant negative causal effect.
- Subjects
LINE of business reporting; ORGANIZATIONAL performance; MARKET power measurement; CAUSAL Dimension Scale; EMPIRICAL research; PERSISTENCE (Economics)
- Publication
Industrial & Corporate Change, 2019, Vol 28, Issue 2, p241
- ISSN
0960-6491
- Publication type
Article
- DOI
10.1093/icc/dty014