Abstract
AbstractEstimates of limit pricing values are useful to researchers studying princing strategies and oligopolistic behavior. Previous studies have demonstrated that limit prices (profits) can be estimated with the use of data on the entry of new firms. Unfortunately, entry data are scarce. The current study presents a methodology based on a property of dynamic‐stochastic theories of limit pricing wherein limit prices can be estimated without entry data. This methodology requires the use of price elasticity of demand values which are more readily available than entry data. Following the methodology section, an application of this method is presented with a cross‐section sample of consumer goods industries.
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