CAN MARKET POWER BE ESTIMATED

Simulation experiments demonstrate the strengths and weaknesses of the Panzar-Rosse, Hall, and structural approaches to estimating or testin g market power. The structural model works well only if it is properly specified. The Hall methods works well in industries with constant re turns to scale (CRS); however, even slight deviations from CRS lead to serious biases. Although easier to use than the structural approach, the Panzar-Rosse approach cannot distinguish between collusion and com petition for some technologies. Some empirical applications of the Hal l and Panzar-Rosse methods are provided.