THE ESTIMATION OF BARONE-CURVES BASED ON THE IWAI-MODEL

Abstract

Based on the evolutionary model of Iwai, the authors show that the supply curve of Barone can be interpreted as an outcome of the dynamic process of Schumpeterian competition. By using empirically given distributions of profits, the Barone-curve can be estimated significantly for different industries of the Federal Republic of Germany. In this respect, the paper at hand not only provides a strong argument for the validity of the Iwai-model, but also gives important insights into the individual forces of Schumpeterian competition and their impact on the market structures in an economy.