Industrial Structure, Concentration and the Speed of Price Adjustment

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It is argued that the relationship between market structure and the speed of price adjustment involves two distinct forces with opposing directions; "the leadership effect" and the "industry profitability effect". The direction of the relationship will depend on the relative importance of these effects. Estimation of an equation explaining the speed of price adjustment in terms of industrial concentration and the length of the production period provided evidence of negative effects for both the above variables.