TY - JOUR
T1 - The Panzar-Rosse revenue test and market power in banking
AU - Shaffer, Sherrill
AU - Spierdijk, Laura
PY - 2015
Y1 - 2015
N2 - The Panzar-Rosse H statistic is a commonly used measure of market power in banking. It is widely believed that H>. 0 is inconsistent with significant market power. This study rigorously disproves that perception. Instead, the possibility of H>. 0 under conditions of substantial market power turns out robust to the timing of banks' actions, relative costs, choice of strategic variable, degree of product differentiation, strategy (static or dynamic), and degree of heterogeneity in banks' conduct (collusive versus fringe), and hence may be common in practice.
AB - The Panzar-Rosse H statistic is a commonly used measure of market power in banking. It is widely believed that H>. 0 is inconsistent with significant market power. This study rigorously disproves that perception. Instead, the possibility of H>. 0 under conditions of substantial market power turns out robust to the timing of banks' actions, relative costs, choice of strategic variable, degree of product differentiation, strategy (static or dynamic), and degree of heterogeneity in banks' conduct (collusive versus fringe), and hence may be common in practice.
U2 - 10.1016/j.jbankfin.2015.09.019
DO - 10.1016/j.jbankfin.2015.09.019
M3 - Article
VL - 61
SP - 340
EP - 347
JO - Journal of Banking and Finance
JF - Journal of Banking and Finance
SN - 0378-4266
ER -