Copyright (c) 2013 Bryant University All rights reserved. http://digitalcommons.bryant.edu/econ_jou Recent documents in Economics Faculty Journal Articles en-us Mon, 18 Mar 2013 16:57:49 PDT 3600 http://digitalcommons.bryant.edu/econ_jou/2 http://digitalcommons.bryant.edu/econ_jou/2 Thu, 16 Nov 2006 10:52:58 PST The explanation for the positive relationship between concentration and profitability is one of the most controversial topics in the field of industrial organization. The interest in this topic is due primarily to the conflicting antitrust policy implications originating from two competing hypotheses: the market power hypothesis and the efficiency hypothesis. The current paper presents an alternative approach. It examines the competing hypotheses by focusing on the behavior of potential entrants. A key premise is that potential entrants respond differently to incumbents' Ricardian rents and to incumbents' monopoly rents.

]]> Joseph Shaanan http://digitalcommons.bryant.edu/econ_jou/1 http://digitalcommons.bryant.edu/econ_jou/1 Thu, 29 Jun 2006 08:15:52 PDT The paper presents an empirical test of the impact of irreversibility on threshold return levels and on investment. These tests permit an examination of a key concept and some predictions of irreversible investment theory, which links the option pricing approach with Tobin's q theory. A key feature of the paper is that estimates of the threshold return levels required for investment, which account for both options to invest and disinvest, are obtained internally from the empirical model. The study employs a panel data set consisting of U.S. manufacturing firms and finds that irreversibility, through its negative impact on marginal put options and the resulting increase in threshold returns, reduces investment in two of the four groups of firms studied.

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