The Market Power of Technology by Mordecai Kurz

Author:Mordecai Kurz
Language: eng
Format: epub
Tags: BUS069030, BUSINESS & ECONOMICS / Economics / Theory, BUS070030, BUSINESS & ECONOMICS / Industries / Computers & Information Technology
Publisher: Columbia University Press
Published: 2023-01-03T00:00:00+00:00

5.4 The Effect of General Electric’s Monopoly Power on Electricity Diffusion

The setting for my measurement is the same as that in section 1.4.2 and equation (1.4) in chapter 1, with unknown parameter αt, which may change and needs to be estimated. Under the same assumptions made in chapter 1, optimal pricing leads to the following conditions:

(5.10a)

(5.10b)

(5.10c)

The time variability of θt reflects the changing market power of the firm.

The methodology that I use here follows the methods developed in chapter 4, where market power is deduced from relative shares. I use the observed factor payments, based on wage and capital rental data from GE’s financial reports, to construct these relative shares. All information about the data used to estimate the GE relative shares is available in the detailed online data appendix, where I provide the actual data that I constructed for GE for the period 1894–1939.

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