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TRACING THE DYNAMICS OF COMPETITION: EVIDENCE FROM COMPANY PROFITS
Author(s) -
CRESPO CUARESMA JESÚS,
GSCHWANDTNER ADELINA
Publication year - 2008
Publication title -
economic inquiry
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.823
H-Index - 72
eISSN - 1465-7295
pISSN - 0095-2583
DOI - 10.1111/j.1465-7295.2007.00062.x
Subject(s) - autoregressive model , economics , econometrics , persistence (discontinuity) , tracing , simple (philosophy) , profit (economics) , series (stratigraphy) , competition (biology) , time series , microeconomics , computer science , mathematics , statistics , engineering , paleontology , ecology , philosophy , geotechnical engineering , epistemology , biology , operating system
This article proposes a simple approach to analyzing profit dynamics, which allows for time‐varying persistence of profits. The time series model is a simple autoregressive process where the dynamics of the persistence parameter follow an autoregressive process. Using the longest time series available on profits for more than a hundred U.S. firms, we find that there is ample evidence of time variation in the persistence parameter. ( JEL L00, C22)