A Full Equilibrium Relevant Market Test: Application to Computer Servers
The paper defines, implements and compares two empirical tests of relevant markets. While the traditional SSNIP test compares an initial industry equilibrium to an out-of-equilibrium situation, the FERM test, our contribution, compares the same initial equilibrium to an other equilibrium outcome. Hence, it is more in line with the behavioural assumptions of the underlying model of industry equilibrium and this can have significant consequences. We define these concepts formally and apply them to the industry of computer servers by estimating a model on a large dataset. We find several smaller relevant markets in the low-end segment of servers.
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|Date of creation:||Aug 2005|
|Publication status:||Published in Review of Law & Economics, vol. 7, n°1, avril 2011, p. 31-73.|
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