Dassiou, Xeni; (1990) A discrimination theory for the market power versus the efficiency hypotheses under regimes of discrete technical shocks. Doctoral thesis (Ph.D), UCL (University College London).

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Abstract

A cooperative oligopoly model is developed where the production function of each firm is of a Cobb-Douglas type augmented for discrete and continuous, embodied and disembodied, exogenously determined technical change. Firms are divided into two groups depending on whether they have adopted the latest major process innovation or not. The economic rate of return to revenue is a function of collusion; the latter is parameterised and exogenous. The relation among relative market shares and relative technologies and rates of return for every two firms is established at the firm level while at the industry level the relation among the Herfindahl index, the ratio of the rates of return and the ratio of the technologies of the two groups is established. An analysis follows determining the circumstances under which the ambiguity between the market power and the differential efficiency hypotheses can be resolved by using either firm level or industry level conclusions. Two different versions of the model are considered: a) Capital adjustment is instantaneous and costless b) The cost of gross investment is a function of its own size.

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