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Department of Economics, Copenhagen Business School Working Paper Series, Department of Economics, Copenhagen Business School

No 02-2005:
Sequential versus simultaneous market

Niels Haldrup, Peter Møllgaard and Claus Kastberg Nielsen

Abstract: Delineation of the relevant market forms a pivotal part of most antitrust cases. The standard approach is sequential. First the product market is delineated, then the geographical market is defined. Demand and supply substitution in both the product dimension and the geographical dimension will normally be stronger than substitution in either dimension. By ignoring this one might decide first to define products narrowly and then to define the geographical extent narrowly ignoring the possibility of a diagonal substitution. These reflections are important in the empirical delineation of product and geographical markets. Using a unique data set for prices of Norwegian and Scottish salmon, we propose a methodology for simultaneous market delineation and we demonstrate that compared to a sequential approach conclusions will be reversed.

Keywords: Relevant market; econometric delineation; salmon; (follow links to similar papers)

JEL-Codes: C30; K21; L41; Q22; (follow links to similar papers)

24 pages, March 15, 2005

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