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A theoretical approach to market definition analysis

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  • Javier Elizalde

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Abstract

This work performs a theoretical approach to market definition analysis. The conditions a test must satisfy are selected in order to define the relevant market according to the jurisdictions of the United States and the European Union as most tests proposed by economists tend not to satisfy all the required conditions. I use two models of horizontal product differentiation to illustrate the nature of the tests that can be used under each jurisdiction. The main conclusion of the paper is that the empirical tests for market definition which are valid in the current legislations in the United States and the European Union must be performed using a different approach which may yield different relevant markets. Copyright Springer Science+Business Media, LLC 2012

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File URL: http://hdl.handle.net/10.1007/s10657-011-9231-1
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Bibliographic Info

Article provided by Springer in its journal European Journal of Law and Economics.

Volume (Year): 34 (2012)
Issue (Month): 3 (December)
Pages: 449-475

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Handle: RePEc:kap:ejlwec:v:34:y:2012:i:3:p:449-475

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Web page: http://www.springerlink.com/link.asp?id=100264

Related research

Keywords: Antitrust analysis; Horizontal product differentiation; Market definition; Oligopolistic competition; D43; K21; L11; L13; L41;

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References

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  1. Uri, Noel D & Rifkin, Edward J, 1985. "Geographic Markets, Causality and Railroad Deregulation," The Review of Economics and Statistics, MIT Press, vol. 67(3), pages 422-28, August.
  2. Javier Elizalde, 2013. "Market definition with differentiated products: a spatial competition application," European Journal of Law and Economics, Springer, vol. 36(3), pages 471-521, December.
  3. Klein, Chris & Rifkin, Edward J. & Uri, Noel D., 1985. "A note on defining geographic markets," Regional Science and Urban Economics, Elsevier, vol. 15(1), pages 109-119, February.
  4. Slade, Margaret E, 1986. "Exogeneity Tests of Market Boundaries Applied to Petroleum Products," Journal of Industrial Economics, Wiley Blackwell, vol. 34(3), pages 291-303, March.
  5. Economides, Nicholas, 1989. "Symmetric equilibrium existence and optimality in differentiated product markets," Journal of Economic Theory, Elsevier, vol. 47(1), pages 178-194, February.
  6. Baker, Jonathan B. & Bresnahan, Timothy F., 1988. "Estimating the residual demand curve facing a single firm," International Journal of Industrial Organization, Elsevier, vol. 6(3), pages 283-300.
  7. Mario Forni, 2004. "Using Stationarity Tests in Antitrust Market Definition," American Law and Economics Review, Oxford University Press, vol. 6(2), pages 441-464.
  8. Steven C. Salop, 1979. "Monopolistic Competition with Outside Goods," Bell Journal of Economics, The RAND Corporation, vol. 10(1), pages 141-156, Spring.
  9. Steffen Brenner, 2005. "Hotelling Games with Three, Four, and More Players," Journal of Regional Science, Wiley Blackwell, vol. 45(4), pages 851-864.
  10. d'ASPREMONT, Claude & GABSZEWICZ, Jean J. & THISSE, Jacques-François, . "On Hotelling's "Stability in competition"," CORE Discussion Papers RP -385, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  11. Hogarty, Thomas F & Elzinga, Kenneth G, 1972. "The Demand for Beer," The Review of Economics and Statistics, MIT Press, vol. 54(2), pages 195-98, May.
  12. Scheffman, David T & Spiller, Pablo T, 1987. "Geographic Market Definition under the U.S. Department of Justice Merger Guidelines," Journal of Law and Economics, University of Chicago Press, vol. 30(1), pages 123-47, April.
  13. Neven, Damien, 1985. "Two Stage (Perfect) Equilibrium in Hotelling's Model," Journal of Industrial Economics, Wiley Blackwell, vol. 33(3), pages 317-25, March.
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Citations

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Cited by:
  1. Vladimír Hajko & Jaroslav Bil, 2013. "The Relevant Markets for Meat Production and Processing in the Czech Republic: Analysis of the Price Movements," Czech Economic Review, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, vol. 7(3), pages 178-197, November.
  2. Javier Elizalde, 2013. "Market definition with differentiated products: a spatial competition application," European Journal of Law and Economics, Springer, vol. 36(3), pages 471-521, December.
  3. Thierry BLAYAC & Patrice BOUGETTE & Christian MONTET, 2012. "How Consumer Information Curtails Market Power in the Funeral Industry," Working Papers 12-12, LAMETA, Universtiy of Montpellier, revised Apr 2012.

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