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Market Definition: A Sensitivity Analysis

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  • Paul S. Koh

    (Yonsei University)

Abstract

Market definition holds significant importance in antitrust cases, yet achieving consensus on the correct approach remains elusive. As a result, analysts routinely entertain multiple market definitions to ensure the resilience of their conclusions. I propose a simple framework for conducting organized sensitivity analysis with respect to market definition. I model candidate market definitions as partially ordered and use a Hasse diagram, a directed acyclic graph representing a finite partial order, to summarize the sensitivity analysis. I use the Shapley value and the Shapley-Shubik power index to quantify the average marginal contribution of each firm in driving the conclusion. I illustrate the method's usefulness with an application to the Albertsons/Safeway (2015) merger.

Suggested Citation

  • Paul S. Koh, 2025. "Market Definition: A Sensitivity Analysis," Working papers 2025rwp-262, Yonsei University, Yonsei Economics Research Institute.
    • Handle: RePEc:yon:wpaper:2025rwp-262
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