Making sense of market delineation with the aggregate diversion ratio
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Date
2007-08Metadata
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- Discussion papers (SAM) [667]
Abstract
The US Merger Guidelines leave it an open question if the SSNIP test
requires an increase in one, some or all prices in the candidate market. We
argue that the characteristics of the candidate market in question should
be decisive for how to perform the SSNIP test. If there are asymmetries
between products, increasing one price might be a better procedure in
order to identify competitive constraints. Katz & Shapiro (2003) derived
a one-price criterion in terms of the aggregate diversion ratio which is applicable for asymmetric candidate markets. Unfortunately, the derivation
is incorrect. We derive a corrected criterion.
Publisher
Norwegian School of Economics and Business Administration. Department of EconomicsSeries
Discussion paper2007:18