The purpose of this study is to analyse theoretically the implications of applying the procedure for market delineation used by competitions authorities in the EU and in the US. Specifically, we investigate the circumstances under which the procedure will lead to positive relation between actual market power and the assessed degree of market dominance. Another objective is to test whether the procedure is neutral in the sense that it does not discriminate among different sources of market power. In order to address these issues, we develop an oligopoly model that allows for an arbitrary number of firms as well as for vertical an horizontal product differentiation. It is found that the correlation between actual market power and assessed market dominance is likely to be weak and that the procedure discriminates strongly among different sources of market power.
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Paper provided by Stockholm University, Department of Economics in its series Research Papers in Economics with number
1999:7.
Length: 21 pages Date of creation: 13 Sep 1999 Date of revision: Publication status: Published in Journal of Industry, Competition and Trade, 2001, pages 81-99. Handle: RePEc:hhs:sunrpe:1999_0007
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Find related papers by JEL classification: K40 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - General L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets L40 - Industrial Organization - - Antitrust Issues and Policies - - - General
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