Prices and Endogenous Market Structure in Office Supply Superstores

19 Pages Posted: 14 Apr 2008

See all articles by Mark D. Manuszak

Mark D. Manuszak

Independent

Charles C. Moul

Miami University of Ohio - Department of Economics

Abstract

We consider the relationship between prices and market structure for office supply superstores in the U.S. which was central to the Federal Trade Commission's opposition to the merger of Staples and Office Depot. Due to potential biases in a standard regression, we employ a two-stage approach in which a model of endogenous market structure provides correction terms for a second stage price regression. Using a cross-section of data on market structures and Staples' prices, we find that excluding the correction term substantially distorts the importance of competitors as the two-stage model yields stronger negative relationships between prices and market structure variables.

Suggested Citation

Manuszak, Mark D. and Moul, Charles C., Prices and Endogenous Market Structure in Office Supply Superstores. The Journal of Industrial Economics, Vol. 56, Issue 1, pp. 94-112, March 2008, Available at SSRN: https://ssrn.com/abstract=1119637 or http://dx.doi.org/10.1111/j.1467-6451.2008.00334.x

Charles C. Moul

Miami University of Ohio - Department of Economics ( email )

Farmer School of Business
Oxford, OH 45056
United States

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