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TESTS OF (ABUSE OF) DOMINATION: The Danish cement industry

Author

Listed:
  • Funding la Cour, Lisbeth

    (Department of Economics, Copenhagen Business School)

  • Møllegaard, H. Peter

    (University of Copenhagen,)

Abstract

We test econometrically whether the sole Danish producer of cement holds a dominant position in the Danish market for (grey) cement. In import penetration tests, we find that its pricing and quantity decisions are independent of import price and quantity, implying that it can act to a considerable extent independently of its competitors. We also test whether it can act independently of its customers and find that its demand is inelastic with respect to its price. It thus holds a dominant position in the sense of the European Court of Justice. Having established dominance, we go on to illustrate that based on our data, it is difficult to conclude that it has abused its dominant position in the sense of the Court.

Suggested Citation

  • Funding la Cour, Lisbeth & Møllegaard, H. Peter, 2000. "TESTS OF (ABUSE OF) DOMINATION: The Danish cement industry," Working Papers 10-2000, Copenhagen Business School, Department of Economics.
  • Handle: RePEc:hhs:cbsnow:2000_010
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    File URL: http://openarchive.cbs.dk/cbsweb/handle/10398/7560
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    References listed on IDEAS

    as
    1. Franses, Philip Hans & Haldrup, Niels, 1994. "The Effects of Additive Outliers on Tests for Unit Roots and Cointegration," Journal of Business & Economic Statistics, American Statistical Association, vol. 12(4), pages 471-478, October.
    2. Newmark, Craig M., 1998. "Price and seller concentration in cement: effective oligopoly or misspecified transportation cost?," Economics Letters, Elsevier, vol. 60(2), pages 243-250, August.
    3. Johansen, Soren & Juselius, Katarina, 1994. "Identification of the long-run and the short-run structure an application to the ISLM model," Journal of Econometrics, Elsevier, vol. 63(1), pages 7-36, July.
    4. Johansen, Soren, 1995. "Likelihood-Based Inference in Cointegrated Vector Autoregressive Models," OUP Catalogue, Oxford University Press, number 9780198774501.
    5. Jans, Ivette & Rosenbaum, David I., 1997. "Multimarket contact and pricing: Evidence from the U.S. cement industry," International Journal of Industrial Organization, Elsevier, vol. 15(3), pages 391-412, May.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Dominant position; econometric tests; excessive pricing; cement.;

    JEL classification:

    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
    • L61 - Industrial Organization - - Industry Studies: Manufacturing - - - Metals and Metal Products; Cement; Glass; Ceramics

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