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A Full Equilibrium Relevant Market Test: Application to Computer Servers

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Author Info

  • Ivaldi, Marc
  • Lörincz, Szabolcs

Abstract

The paper defines, implements and compares two empirical tests of relevant markets. While the traditional SSNIP test compares an initial industry equilibrium to an out-of-equilibrium situation, the FERM test, our contribution, compares the same initial equilibrium to an other equilibrium outcome. Hence, it is more in line with the behavioural assumptions of the underlying model of industry equilibrium and this can have significant consequences. We define these concepts formally and apply them to the industry of computer servers by estimating a model on a large dataset. We find several smaller relevant markets in the low-end segment of servers.

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Bibliographic Info

Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 4917.

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Date of creation: Feb 2005
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Handle: RePEc:cpr:ceprdp:4917

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Related research

Keywords: computer servers; differentiated products; relevant market tests;

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References

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  1. Hendel, Igal, 1999. "Estimating Multiple-Discrete Choice Models: An Application to Computerization Returns," Review of Economic Studies, Wiley Blackwell, vol. 66(2), pages 423-46, April.
  2. Ivaldi, Marc & Verboven, Frank, 2001. "Quantifying the Effects from Horizontal Mergers in European Competition Policy," CEPR Discussion Papers 2697, C.E.P.R. Discussion Papers.
  3. Cardell, N. Scott, 1997. "Variance Components Structures for the Extreme-Value and Logistic Distributions with Application to Models of Heterogeneity," Econometric Theory, Cambridge University Press, vol. 13(02), pages 185-213, April.
  4. repec:cup:cbooks:9780521816632 is not listed on IDEAS
  5. repec:cup:etheor:v:13:y:1997:i:2:p:185-213 is not listed on IDEAS
  6. Berry, Steven & Levinsohn, James & Pakes, Ariel, 1995. "Automobile Prices in Market Equilibrium," Econometrica, Econometric Society, vol. 63(4), pages 841-90, July.
  7. Brenkers, Randy & Verboven, Frank, 2005. "Market Definition with Differentiated Products - Lessons from the Car Market," CEPR Discussion Papers 5249, C.E.P.R. Discussion Papers.
  8. Jerome Foncel & Marc Ivaldi, 2005. "Operating System Prices In The Home Pc Market," Journal of Industrial Economics, Wiley Blackwell, vol. 53(2), pages 265-297, 06.
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Citations

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Cited by:
  1. Argentesi, Elena & Ivaldi, Marc, 2005. "Market Definition in the Printed Media Industry: Theory and Practice," CEPR Discussion Papers 5096, C.E.P.R. Discussion Papers.
  2. Szabolcs Lorincz, 2005. "Persistence Effects in a Dynamic Discrete Choice Model - Application to Low-End Computer Servers," IEHAS Discussion Papers 0510, Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences.
  3. Argentesi, Elena & Ivaldi, Marc, 2005. "Market Definition in Printed Media Industry: Theory and Practice," IDEI Working Papers 376, Institut d'Économie Industrielle (IDEI), Toulouse.

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