The impact of the foreign sector on the structure-conduct-performance model of Canadian manufacturing industry : a simultaneous approach
Date
1980
Authors
Coxon, Paul John
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Abstract
In this study six equations are specified which explain the determinants of profitability, advertising intensity, concentration, exports, imports, and foreign ownership. These equations are incorporated into a simultaneous system and estimated using a sample of fifty-four Canadian industries. The system is then used to examine the effect of the foreign sector upon the structure, conduct and performance of Canadian manufacting industry.
Particular attention is given to the econometric problems of simultaneity and multicollinearity and two stage ridge estimation is used to deal with them. The study emphasises the consequences of inappropriate estimation techniques by comparing these results with the ordinary least squares and two least squares estimates obtained from the same sample.