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A Simple Critical Loss Test For The Geographical Market

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  • Niklas Strand

Abstract

To apply competition law, markets have to be defined, both in the product space and in the geographical space. A rigorous approach requires the estimation of cross price elasticities, which is always time-consuming and often impossible. This paper proposes a simple method for defining geographical markets when there are substantial transport costs. We derive results corresponding to a critical loss test and give an example of how the test can be applied using data from the Swedish pulpwood industry.

Suggested Citation

  • Niklas Strand, 2006. "A Simple Critical Loss Test For The Geographical Market," Journal of Competition Law and Economics, Oxford University Press, vol. 2(4), pages 697-707.
    • Handle: RePEc:oup:jcomle:v:2:y:2006:i:4:p:697-707.
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    File URL: http://hdl.handle.net/10.1093/joclec/nhl020
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    Cited by:

    1. 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.
    2. Institute of Economics, 2020. "Institut für Volkswirtschaftslehre Forschungsbericht 2019," Working Paper Series in Economics 388, University of Lüneburg, Institute of Economics.

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