The Persistence of Profits in the Long Run: A New Approach
- 18 June 2008
- journal article
- Published by Taylor & Francis in International Journal of the Economics of Business
- Vol. 15 (2) , 229-244
- https://doi.org/10.1080/13571510802134403
Abstract
We present a trend‐based alternative to the standard first‐order autoregression model in persistence of profits studies. This is motivated by reservations over the interpretation of the standard model, and rests on a different concept of dynamic competition. A nine‐category taxonomy of long‐run persistence stereotypes is developed. Structural time series estimates are presented for a sample of UK companies. We find the null of long run competitive equilibrium not rejected in nearly a third of cases, but non‐eroding persistence to be present in around 60%.Keywords
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