Scandinavian Working Papers in Economics

Working Papers,
Copenhagen Business School, Department of Economics

No 10-2000: TESTS OF (ABUSE OF) DOMINATION: The Danish cement industry

Lisbeth Funding la Cour and H. Peter Møllegaard
Additional contact information
Lisbeth Funding la Cour: Department of Economics, Copenhagen Business School, Postal: Department of Economics, Copenhagen Business School, Solbjerg Plads 3 C, 5. sal, DK-2000 Frederiksberg, Denmark
H. Peter Møllegaard: University of Copenhagen,, Postal: Centre for Industrial Economics,, University of Copenhagen,, Studiestræde 6;, DK-1455 Copenhagen C.

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.

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

JEL-codes: K21; L41; L61

32 pages, November 6, 2000

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