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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
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    References listed on IDEAS

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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. 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.
    4. Searing Elizabeth A. M., 2014. "Charitable (Anti)Trust: The Role of Antitrust Regulation in the Nonprofit Sector," Nonprofit Policy Forum, De Gruyter, vol. 5(2), pages 1-28, October.
    5. Ljiljana Maksimović & Milan Kostić, 2012. "Limitations In The App Lication Of Concentration Indicators – Example Of Insurance Market In Serbia, Croatia, Slovenia, Romania And Austria," Serbian Association of Economists Journal, SAE - Serbian Association of Economists, issue 3-4, pages 199-205, May.
    6. Gerry Boyle, 2003. "Tests of market power in Irish Manufacturing Industries," Economics Department Working Paper Series n1210503.pdf, Department of Economics, National University of Ireland - Maynooth.
    7. Christoph Kleineberg, 2020. "Market definition of the german retail gasoline industry on highways and those in the immediate vicinity," Working Paper Series in Economics 389, University of Lüneburg, Institute of Economics.
    8. 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.
    9. 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.
    10. 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.
    11. Anna I. Meleshkina & Irina N. Filippova & Andrey E. Shastitko, 2022. "Empirical geographic market definition for antitrust: The case of the Russian cement market," Upravlenets, Ural State University of Economics, vol. 13(6), pages 15-29, January.
    12. Aashna Mehta & Habib Hasan Farooqui & Sakthivel Selvaraj, 2016. "A Critical Analysis of Concentration and Competition in the Indian Pharmaceutical Market," PLOS ONE, Public Library of Science, vol. 11(2), pages 1-11, February.
    13. Kwon, Youngsun & Cho, Shin, 2015. "Defining a cluster market: The case of the Korean Internet portal service market," Telecommunications Policy, Elsevier, vol. 39(11), pages 921-932.
    14. Institute of Economics, 2020. "Institut für Volkswirtschaftslehre Forschungsbericht 2019," Working Paper Series in Economics 388, University of Lüneburg, Institute of Economics.
    15. Katharina Biely & Dries Maes & Steven Van Passel, 2018. "Market Power Extended: From Foucault to Meadows," Sustainability, MDPI, vol. 10(8), pages 1-23, August.
    16. Kwon, Youngsun, 2014. "Defining a cluster market: The case of the Korean internet portal service market," 25th European Regional ITS Conference, Brussels 2014 101399, International Telecommunications Society (ITS).
    17. Julie Bower & Howard Cox, 2013. "Merger regulation, firms, and the co-evolutionary process: An empirical study of internationalisation in the UK alcoholic beverages industry 1985-2005," Working Papers 48, Queen Mary, University of London, School of Business and Management, Centre for Globalisation Research.
    18. Bantle, Melissa & Muijs, Matthias, 2018. "A new price test in geographic market definition – an application to german retail gasoline market," Working Paper 180/2018, Helmut Schmidt University, Hamburg.
    19. I. M. Dobbs, 2003. "Demand, cost elasticities and pricing benchmarks in the hypothetical monopoly test: the consequences of a simple SSNIP," Applied Economics Letters, Taylor & Francis Journals, vol. 10(9), pages 545-548.
    20. Willem Boshoff, 2006. "Quantitative competition analysis: Stationarity tests in geographic market definition," Working Papers 17/2006, Stellenbosch University, Department of Economics.

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