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%.
|Number of pages||16|
|Journal||International Journal of the Economics of Business|
|Publication status||Published - 31 Dec 2008|
- Profit persistence
- Structural Time Series