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Market Definition with Shock Analysis

22 Pages Posted: 11 Feb 2010  

Øystein Daljord

University of Chicago, Booth School of Business

Lars Sorgard

Norwegian School of Economics and Business Administration (NHH); Norwegian School of Economics (NHH) - Department of Economics

Øyvind Thomassen

KU Leuven - Center for Economic Studies

Date Written: December 4, 2007

Abstract

The SSNIP test for market definition requires information about demand substitution and profitability. If detailed information about demand is not available, observed effects of a shock in the industry may be an alternative source of evidence. In the existing literature, shock analysis has unfortunately not been clearly linked to the SSNIP test. The lack of a rigorous framework may confuse the interpretation of the effects of shocks. We illustrate how a shock can be evaluated within the SSNIP framework with a minimum of data. We apply our criterion to a capacity expansion in the ferry market in the North Sea.

Suggested Citation

Daljord, Øystein and Sorgard, Lars and Thomassen, Øyvind, Market Definition with Shock Analysis (December 4, 2007). NHH Dept. of Economics Discussion Paper No. 36/2007. Available at SSRN: https://ssrn.com/abstract=1550742 or http://dx.doi.org/10.2139/ssrn.1550742

Øystein Daljord

University of Chicago, Booth School of Business ( email )

Chicago, IL 60637
United States
7738342146 (Phone)

HOME PAGE: http://faculty.chicagobooth.edu/oystein.daljord/index.html

Lars Sorgard (Contact Author)

Norwegian School of Economics and Business Administration (NHH) ( email )

Helleveien 30
Bergen, NO-5045
Norway
+47 5 595 9723 (Phone)
+47 5 595 9543 (Fax)

Norwegian School of Economics (NHH) - Department of Economics

Helleveien 30
N-5035 Bergen
Norway

Øyvind Thomassen

KU Leuven - Center for Economic Studies ( email )

Naamsestraat 69
Leuven, B-3000
Belgium

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