A Proposed Method for Analyzing Competition Among Differentiated Products

12 Pages Posted: 7 Mar 2010  

Jerry A. Hausman

Massachusetts Institute of Technology (MIT) - Department of Economics; National Bureau of Economic Research (NBER)

Gregory K. Leonard

Edgeworth Economics

J. Douglas Zona

Charles River Associates (CRA)

Date Written: 1992

Abstract

Economists recognize that conventional measures of market concentration that may be appropriate when relevant products are homogeneous are inappropriate, except under very special circumstances. Meaningful analysis in a market with differentiated products must recognize the fact that all relevant products do not compete to the same degree, since the products vary in their degree of substitutability. In this article, we propose an alternative approach to analyzing competition among differentiated products. This approach examines the full structure of demand in a market by including all products of interest (rather than drawing an exclusive boundary) and then determining the competitive importance of each product by its degree of substitution with the products of the merging firms.

Keywords: Competition, Differentiated Products

JEL Classification: L4

Suggested Citation

Hausman, Jerry A. and Leonard, Gregory K. and Zona, J. Douglas, A Proposed Method for Analyzing Competition Among Differentiated Products (1992). Antitrust Law Journal, Vol. 60, 1992. Available at SSRN: https://ssrn.com/abstract=1565807

Jerry A. Hausman

Massachusetts Institute of Technology (MIT) - Department of Economics ( email )

50 Memorial Drive
Room E52-271a
Cambridge, MA 02142
United States
617-253-3644 (Phone)
617-253-1330 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Gregory K. Leonard (Contact Author)

Edgeworth Economics ( email )

333 Bush St.
Suite 1450
San Francisco, CA 94104
United States

J. Douglas Zona

Charles River Associates (CRA) ( email )

5335 College Avenue
Suite 21
Oakland, CA 94618
United States

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