A simultaneous equations analysis of market structure, conduct and performance: new evidence from United States manufacturing industries

Abstract

In this study, we specify and estimate a simultaneous equations model of US manufacturing industries in which advertising intensity, concentration, and profitability are treated as endogenous variables. Concentration is explained in terms of dynamic adjustment of concentration to its longrun level, while advertising intensity and profitability are determined by variables derived primarily from the profitmaximizing behavior of firms.