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Market Definition and Market Power in Competition Analysis - Some Practical Issues

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  • Patrick Massey

    (Competition Authority)

Abstract

Market definition plays a key role in competition analysis and has often proved controversial. However, it is merely a means to an end, the real issue being to establish whether or not firms have significant market power, i.e. the power to increase prices. This objective is rather different to the traditional neo-classical economic view of a market. The introduction of the SSNIP test in the US Department of Justice 1982 Merger Guidelines resulted in the development of new methods for defining markets and for measuring market power directly, thus eliminating the need to define the market at all.

Suggested Citation

  • Patrick Massey, 2000. "Market Definition and Market Power in Competition Analysis - Some Practical Issues," The Economic and Social Review, Economic and Social Studies, vol. 31(4), pages 309-328.
  • Handle: RePEc:eso:journl:v:31:y:2000:i:4:p:309-328
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    File URL: http://www.esr.ie/vol31_4/2Massey.pdf
    File Function: First version, 2000
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    References listed on IDEAS

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    1. 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 123-147, April.
    2. 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 555-585, October.
    3. Sims, Christopher A, 1972. "Money, Income, and Causality," American Economic Review, American Economic Association, pages 540-552.
    4. Kahai, Simran K & Kaserman, David L & Mayo, John W, 1996. "Is the "Dominant Firm" Dominant? An Empirical Analysis of AT&T's Market Power," Journal of Law and Economics, University of Chicago Press, vol. 39(2), pages 499-517, October.
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    Cited by:

    1. Wolfgang Briglauer & Anton Schwarz, 2005. "Can the HM-test be brought to an end?," Netnomics, Springer, vol. 7(1), pages 1-16, April.
    2. Willem H. Boshoff, 2011. "Antitrust market definition using statistical learning techniques and consumer characteristics," Working Papers 224, Economic Research Southern Africa.
    3. Jesper Fredborg Hurić-Larsen & Angela Münch, 2016. "Competition and Environmental Policy in the EU: Old Foes, New Friends?," Journal of Industry, Competition and Trade, Springer, pages 137-153.
    4. Gerry E. Boyle, 2004. "Hall-Roeger Tests of Market Power in Irish Manufacturing Industries," The Economic and Social Review, Economic and Social Studies, vol. 35(3), pages 289-304.
    5. Gerry Boyle, 2003. "Tests of market power in Irish Manufacturing Industries," Economics, Finance and Accounting Department Working Paper Series n1210503.pdf, Department of Economics, Finance and Accounting, National University of Ireland - Maynooth.
    6. Christoph Engel, 2003. "Market Definition As a Social Construction (Marktabgrenzung als soziale Konstruktion)," Discussion Paper Series of the Max Planck Institute for Research on Collective Goods 2003_11, Max Planck Institute for Research on Collective Goods.
    7. Hippolyte, Rommell, 2016. "Defining the Relevant Product Market: An Application of Price Tests to the Beer Market in Barbados," MPRA Paper 76183, University Library of Munich, Germany.
    8. Cheung, Cherry & Coucke, Kristien & Neicu, Daniel, 2011. "A Decision Tree as a Quick Scan for Effective Market Functioning," Working Papers 2011/06, Hogeschool-Universiteit Brussel, Faculteit Economie en Management.

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