LONG-RUN EQUILIBRIUM IN THE EMPIRICAL STUDY OF MONOPOLY AND COMPETITION.

A long-run tendency of industry profit rates to converge to a single competitive level has been a fundamental tenet of the industrial organization approach to the study of competitiveness in a market economy. This paper shows that for the post World War II period a weak equalization can be econometrically identified with different reaction speeds by industry. However, persistent profit rate differences endure. Finally, a portfolio theory of risk is considered as an explanation of these differentials. [ABSTRACT FROM AUTHOR]