Sequential versus simultaneous market delineation: The relevant antitrust market for salmon

Niels Haldrup; Peter Møllgaard; Claus Kastberg Nielsen

Sequential versus simultaneous market delineation: The relevant antitrust market for salmon

Niels Haldrup, Peter Møllgaard, Claus Kastberg Nielsen

Department of Economics

Research output: Working paper › Research

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Abstract

Delineation of the relevant market forms a pivotal part of most antitrustcases. The standard approach is sequential. First the product marketis delineated, then the geographical market is defined. Demand andsupply substitution in both the product dimension and the geographicaldimension will normally be stronger than substitution in either dimension.By ignoring this one might decide first to define products narrowly andthen to define the geographical extent narrowly ignoring the possibility ofa diagonal substitution. These reflections are important in the empiricaldelineation of product and geographical markets. Using a unique data setfor prices of Norwegian and Scottish salmon, we propose a methodologyfor simultaneous market delineation and we demonstrate that comparedto a sequential approach conclusions will be reversed.JEL: C3, K21, L41, Q22Keywords: Relevant market, econometric delineation, salmon.

Original language	English
Place of Publication	Frederiksberg
Publisher	Copenhagen Business School, CBS
Number of pages	24
Publication status	Published - 2005

Series	Working Paper / Department of Economics. Copenhagen Business School
Number	2-2005

Keywords

Relevant market
Econometric delineation
Salmon

Access to Document

wp2-2005Final published version, 262 KBLicence: CC BY-NC-ND

Cite this

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AB - Delineation of the relevant market forms a pivotal part of most antitrustcases. The standard approach is sequential. First the product marketis delineated, then the geographical market is defined. Demand andsupply substitution in both the product dimension and the geographicaldimension will normally be stronger than substitution in either dimension.By ignoring this one might decide first to define products narrowly andthen to define the geographical extent narrowly ignoring the possibility ofa diagonal substitution. These reflections are important in the empiricaldelineation of product and geographical markets. Using a unique data setfor prices of Norwegian and Scottish salmon, we propose a methodologyfor simultaneous market delineation and we demonstrate that comparedto a sequential approach conclusions will be reversed.JEL: C3, K21, L41, Q22Keywords: Relevant market, econometric delineation, salmon.

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