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Conduct in a Banking Monopoly

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Abstract

Extending previous empirical work on concentrated markets, this paper appliesa Rosse–Panzar revenue test to quarterly data from a monopoly bank. The testrejects the hypotheses of static monopoly pricing or perfectly contestablepricing. Other tests suggest that the bank was in long-run equilibrium duringthe sample period and did not exhibit particular forms of expense-preferencebehavior. Possible interpretations of the bank's conduct include limit pricingto deter entry or an objective other than maximizing static profit. The resultsraise new questions about conduct among monopoly banks or in declining markets.

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Authors and Affiliations

  1. Department of Economics and Finance, University of Wyoming, Laramie, WY, 82071-3985, U.S.A.

    Sherrill Shaffer

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  1. Sherrill Shaffer
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Shaffer, S. Conduct in a Banking Monopoly. Review of Industrial Organization 20, 221–238 (2002). https://doi.org/10.1023/A:1015091407841

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