Abstract
In this paper, we propose a general equilibrium model of competition by integrating four markets – product market, factor market, market for corporate control, and reputation market – where firms compete against one another. Then we test how these markets are related to one another by applying a panel vector auto-regression (PVAR) model to a 11-year panel data of more than 1,700 publicly listed US firms from 2006 through 2016. Our empirical results show that a positive (negative) performance shock in one market typically has a long-lasting positive (negative) impact on other markets, and the size and sustained length of the impact varies by pairs of the market.
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