TY  - JOUR
AU  - Eden,Benjamin
AU  - Griliches,Zvi
TI  - Productivity, Market Power and Capacity Utilization When Spot Markets   are Complete
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 3697
PY  - 1991
Y2  - May 1991
UR  - http://www.nber.org/papers/w3697
L1  - http://www.nber.org/papers/w3697.pdf
N1  - Author contact info:
Benjamin Eden
Department of Economics
Vanderbilt University
VU station B#351819
Nashville, TN 37235-1819
Tel: 615-322-2189;  b.eden@econ.haifa.ac.il
E-Mail: ben.eden@vanderbilt.edu

Zvi Griliches
E-Mail: N/A user is deceased
AB  - Our test of price-taking behavior looks at the choice of capacity rather than the choice of output. It is motivated by a complete spot markets model in which goods are distinguished by the selling probabilities in addition to other characteristics. When output is explained by total man-hours and a capacity utilization proxy, the coefficient of the first variable is the elasticity of capacity with respect to fixed labor. Under competition and risk neutrality this coefficient is equal to an average labor share. We use this observation to interpret Abbot-Griliches-Hausman's regressions and to argue that once the capacity utilization proxy is included in the regression, Hall's data at the manufacturing level fail to reject the joint hypothesis of competition and risk neutrality. It is also argued that the coefficient of total man-hours does not tell us anything about monopoly power once the capacity utilization proxy is omitted from the regression.
ER  -