Industry Performance Gradient Indexes

摘要: This paper presents a theory of indexes which measure the rate potential improvement in welfare performance an industry. These indicate magnitude gross social gains achievable from appropriate governmental intervention (for example, antitrust, regulatory and deregulatory actions, or threats thereof). The are local measures can be calculated data pertaining to current industry structure (i.e., market shares demand elasticities). Surprisingly, reduce simple transformations standard concentration' monopoly power (namely m-firm concentration ratio, Herfindahl index, Lerner index) given familiar sets assumptions on firm behavior (respectively: collusive price-leadership, quantity Cournot, pure monopoly). Since different modes firms' conduct lead indexes, choice among index formulae should based assessment industry's firms. We find that is as sensitive mode other it observed shares. Consequently, our analysis provides quantification idea per se does not necessarily warrant intervention. Our at once general concept, new rigorously practical conceptual framework for interpretation insights into criteria A rational appraisal desirability action towards phrased comparison benefits costs Each many possible actions conceptually associated with vectors qo q outputs firms industry, before after intervention, respectively. each may expressed W(q) W(q?), where W(.) sum consumers' producers' surpluses. While received guide specification objective function, little said this level generality about cost moves q. Even so, useful examine benefit side calculus It appears government regards high values prime candidate intervention.2 Thus, using cost-benefit vocabulary, prevailing view seems strongly positively correlated result corrective action. In we synthesize rigorous number approaches identification industries government's efforts will well placed. aim develop tools capable assessing W(q?). Yet, ensure ones, accept constraints implicit methodology confine ourselves use information only situation focus change W( ) qo; is, sensitivity *American Telephone Telegraph Company Princeton University, was written while were employed by Bell Laboratories partly Dansby's doctoral dissertation. grateful W. J. Baumol, A. Weiss, S. Winter extremely helDful comments discussions. 'The measurement industrial discussed Morris Adelman, John Blair, Russell Parker. used these measurements typically come Bureau Census Federal Trade Commission sources. See E. Morton. 2Although economists debate relative merits various (see Eugene Singer James Delaney), unabashedly uses activities F. M. Scherer).