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Efficiency and Market Power in Greek Food Industries



This paper uses firm level data to examine the market power versus efficiency hypothesis by taking into consideration both the long-run behavior of profitability and the possible endogeneity bias among profitability, market share, and advertising variables. In a sample of 266 Greek food manufacturing firms in the period 1987–95, two-stage least-squares results show both a direct effect of firm characteristics and an indirect effect of industry characteristics on profitability which do not provide support for the efficiency hypothesis alone but they do show that profitability is affected by both firm and industry variables. Copyright 2000, Oxford University Press.

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