Market Structure Conduct Performance Hypothesis Revisited Using Stochastic Frontier Efficiency Analysis

The standard market structure conduct and performance (SCP) hypothesis asserts that there is a direct relationship between the degree of market concentration and the degree of competition among firms. This paper examines the market SCP hypothesis for the U.S. trucking industry using stochastic frontier analysis to estimate technical efficiency. The technical efficiency measure takes into account not only the relationship between inputs used in the production of output, but it also examines the importance of market structure conduct factors to the performance of the firm. An empirical application to U.S. trucking carriers by commodity over the period 1994-2003 is examined. Results reveal that average haul, average load, debt-to-equity and market concentration significantly affected technical efficiency. Capital, fixed and variable input variables were significant in the production function equation. Directions for future research and extension of this analysis are discussed.

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  • Authors:
    • Shaik, Saleem
    • Allen, Albert J
    • Edwards, Seanicaa
    • Harris, James
  • Publication Date: 2009

Language

  • English

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Filing Info

  • Accession Number: 01150831
  • Record Type: Publication
  • Files: TRIS
  • Created Date: Feb 1 2010 10:46AM