Profit, Entry and Changes in Concentration

The simultaneity between profit, entry, and changes in concentration is examined. The sample includes 481 observations on 4-digit industries over the years 1972–1977 and 1977–1982. Results show that profits respond positively to entry barriers and initial concentration. Net entry responds positively to initial profits and responds negatively to entry barriers. Concentration moves toward its steady-state level, but the rate of adjustment is very slow. The competitive process, left on its own, does not seem to move quickly toward equilibrium.

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	Rosenbaum, David I Professor of Economics Expertise: Antitrust Managerial Economics Public Utilities Economics CBA 360 P.O. Box 880489 University of Nebraska-Lincoln Lincoln, NE 68588-0489, USA Phone: (402) 472-2318 Fax: (402) 472-9700 drosenbaum1@unl.edu	Rosenbaum, David I	Economics