On the Misuse of the Profits-sales Ratio to Infer Monopoly Power

Abstract

A large literature tests the structure-conduct-performance paradigm by regressions which use the profits-sales ratio as the dependent variable. That ratio is used because, under constant returns, it is generally supposed that profits/sales equals the Lerner measure of monopoly power. Profits/sales ratios are also used to make inferences about monopoly power… (More)

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Cite this paper

@inproceedings{Fisher2011OnTM, title={On the Misuse of the Profits-sales Ratio to Infer Monopoly Power}, author={Franklin M. Fisher}, year={2011} }