STAGE II: Body of the paper…………………………………………………….. (70%)
In this section, discuss the theoretical framework and empirical findings of your industry.
To offer an analysis of the industry in terms of its structure, conduct and performance. The research question is whether structure and conduct influence the performance of the industry over time.
Theory: The standard theoretical framework or paradigm states that the industry’s structure influences the pricing, and thus the profitability of the industry.
Theoretical Framework: Show how the independent variables affect the performance (dependent variable) of the industry over the past ten years. A measure of performance is profit or net revenue. The key independent variables are concentration ratio (CR4), Market size and Technology. Here, you will define and show the theoretical relationship (state whether it is positive or negative) and then offer some evidence from the existing literature.
Research question: IS the long-run profit increasing or decreasing over time. Use secondary data and existing literature to answer my research question
Here, you will focus your study on profit and only one key independent variable for the last ten years. That is, collect data on profit and CR4 for ten years. Next, draw a scatter plot for performance and CR4. Is there a long-term trend line? Is the relationship positive or negative as expected in the theoretical section above? See Regression Analysis on Page 84 in your textbook.