The Dominant Firm Revisited

Posted: 13 Oct 2009

See all articles by Timothy J. Tardiff

Timothy J. Tardiff

Advanced Analytical Consulting Group, Inc.

Dennis Weisman

Kansas State University - Department of Economics

Date Written: September 2009

Abstract

This paper presents a framework for evaluating whether a firm lacks dominance in a particular market despite manifesting relatively high market shares. We show that demand complementarities and high price-cost margins combine with multi-market participation to reduce the significance of market share in drawing inferences about dominance. We further show the equivalence between this multi-market measure of market power and the critical elasticity for the dominant firm. These findings suggest that the use of traditional (single-market) measures of market power commonly used to infer dominance can lead policymakers to maintain regulatory oversight when market forces are sufficient to provide the requisite degree of “competitive” discipline.

Keywords: K21, L43, L51, L96

Suggested Citation

Tardiff, Timothy J. and Weisman, Dennis, The Dominant Firm Revisited (September 2009). Journal of Competition Law and Economics, Vol. 5, Issue 3, pp. 517-536, 2009. Available at SSRN: https://ssrn.com/abstract=1486554 or http://dx.doi.org/nhp002

Timothy J. Tardiff (Contact Author)

Advanced Analytical Consulting Group, Inc. ( email )

Advanced Analytical Consulting Group, Inc.
112 Water Street, 3rd Floor
Boston, MA 02109
United States
6178274043 (Phone)

Dennis Weisman

Kansas State University - Department of Economics ( email )

Manhattan, KS 66502-4001
United States

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