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A SIMULTANEOUS EQUATIONS APPROACH TO MODELING INDUSTRY STRUCTURE AND ECONOMIC PERFORMANCE
Author(s) -
Coate Malcom B.,
Uri Noel D.
Publication year - 1988
Publication title -
metroeconomica
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.256
H-Index - 29
eISSN - 1467-999X
pISSN - 0026-1386
DOI - 10.1111/j.1467-999x.1988.tb00875.x
Subject(s) - profitability index , outlier , econometrics , simultaneous equations model , economics , estimation , structural equation modeling , sample (material) , simultaneous equations , regression analysis , regression , economic data , computer science , mathematics , macroeconomics , statistics , thermodynamics , finance , physics , management , mathematical analysis , differential equation
This paper presents a simultaneous equations model of profitability, concentration, advertising expenditures, and research and developed outiays. The data are subjected to regression diagnostics in an effort to ascertain the importance to the estimation of a subset of the data than can have a disproportional influence. The estimation results, especially for the advertising expenditures relationship and the research and development outlays equation, do change when a truncated data sample (based on the omission of the outliers) is used. This serves as a partial explanation of why there is disagreement in the literature on market structure and economic performance.