Margins, Concentration and Oligopolistic Interdependence

Abstract

In this paper we examine the relationship between margins, elasticities of demand and the Hirschman‐Herfindahl index of concentration for Australian manufacturing. Our main aim is to estimate the degree of collusion in various manufacturing sectors in the years 1968‐69, 1972‐73 and 1977‐78. There appear to be marked differences in the apparent degree of collusion between industries. It is argued that once sub‐optimization is allowed the Cowling‐Waterson model will yield biased estimates of the degree of collusion. Copyright © 1986, Wiley Blackwell. All rights reserved