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Estimating the Size Distribution of Firms Using Government Summary Statistics
Amos Golan, George Judge and Jeffrey M. Perloff
The Journal of Industrial Economics
Vol. 44, No. 1 (Mar., 1996), pp. 69-80
Published by: Wiley
Stable URL: http://www.jstor.org/stable/2950561
Page Count: 12
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Using a maximum entropy technique, we estimate the market shares of each firm in an industry using the available government summary statistics such as the four-firm concentration ratio (C4) and the Herfindahl-Hirschmann Index (HHI). We show that our technique is very effective in estimating the distribution of market shares in 20 industries. Our results provide support for the recent practice of using HHI rather than C4 as the key explanatory variable in many market power studies, if only one measure is to be used.
The Journal of Industrial Economics © 1996 Wiley