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Market definition in the telecoms industry

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  • Gual, Jordi

    ()
    (IESE Business School)

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    Abstract

    Market definition for antitrust purposes is by now firmly rooted in economic analysis both in the US and the EU, even if the approaches are slightly different. This paper examines the theoretical basis for the legal definitions and assesses whether the general principles need to be adapted when dealing with the telecommunications services industry. The paper finds that the conventional antitrust methodology for market definition can be, to a large extent, readily applied to the telecoms industry but points out some key adjustments that have to be made to this methodology to ensure that the antitrust and regulatory authorities end up defining markets which capture adequately the nature of the competitive interaction in this industry. The definition of markets should be based on a detailed analysis of demand (both complementarities and substitutabilities) and the consideration of all companies which have the assets and capabilities to satisfy these consumer needs. Such an exercise should be done first, and distinguished from the subsequent analysis of the competitive conditions in the markets defined as relevant.

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    Bibliographic Info

    Paper provided by IESE Business School in its series IESE Research Papers with number D/517.

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    Length: 30 pages
    Date of creation: 02 Sep 2003
    Date of revision:
    Handle: RePEc:ebg:iesewp:d-0517

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    Postal: IESE Business School, Av Pearson 21, 08034 Barcelona, SPAIN
    Web page: http://www.iese.edu/
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    Related research

    Keywords: Telecommunications; regulation; market definition; antitrus;

    This paper has been announced in the following NEP Reports:

    References

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    1. Stigler, George J & Sherwin, Robert A, 1985. "The Extent of the Market," Journal of Law and Economics, University of Chicago Press, vol. 28(3), pages 555-85, October.
    2. 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.
    3. Jean-Jacques Laffont & Jean Tirole, 2001. "Competition in Telecommunications," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262621509, December.
    4. David S. Evans & Richard Schmalensee, 2002. "Some Economic Aspects of Antitrust Analysis in Dynamically Competitive Industries," NBER Chapters, in: Innovation Policy and the Economy, Volume 2, pages 1-50 National Bureau of Economic Research, Inc.
    5. Baker, Jonathan B & Baresnahan, Timothy F, 1985. "The Gains from Merger or Collusion in Product-differentiated Industries," Journal of Industrial Economics, Wiley Blackwell, vol. 33(4), pages 427-44, June.
    6. Armstrong, M., 1996. "Network interconnection," Discussion Paper Series In Economics And Econometrics 9625, Economics Division, School of Social Sciences, University of Southampton.
    7. Pleatsikas, Christopher & Teece, David, 2001. "The analysis of market definition and market power in the context of rapid innovation," International Journal of Industrial Organization, Elsevier, vol. 19(5), pages 665-693, April.
    8. Alan B. Krueger, 2001. "An Interview with William J. Baumol," Journal of Economic Perspectives, American Economic Association, vol. 15(3), pages 211-231, Summer.
    9. Economides, Nicholas & Salop, Steven C, 1992. "Competition and Integration among Complements, and Network Market Structure," Journal of Industrial Economics, Wiley Blackwell, vol. 40(1), pages 105-23, March.
    10. Michael L. Katz & Carl Shapiro, 1994. "Systems Competition and Network Effects," Journal of Economic Perspectives, American Economic Association, vol. 8(2), pages 93-115, Spring.
    11. 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.
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    Cited by:
    1. Michelle Connolly & James Prieger, 2009. "Economics at the FCC, 2008–2009: Broadband and Merger Review," Review of Industrial Organization, Springer, vol. 35(4), pages 387-417, December.

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