MEASURING MARKET POWER FOR SOME INDUSTRIAL SECTORS IN AUSTRIA

This paper applies an oligopoly model which parameterizes the degree o f market power for two industrial sectors (glass industry, non-electri cal machinery) in Austria. In contrast all other papers in the New Emp irical Industrial Organization literature we account for the non-stati onarity characteristics of the data series. A dynamic specification pr ocedure which assumes structural long-run equilibrium relationships is therefore applied. Since a simultaneous system with non-linear cross- equation restrictions is implied by the economic model, a full informa tion maximum likelihood method is used. The data reveal a higher degre e of market power for the glass industry than for non-electrical machi nery; this hierarchy is in line with the position of these industries for concentration rates and Herfindahl indices.