A SIMPLE CRITICAL LOSS TEST FOR THE GEOGRAPHICAL MARKET

Niklas Strand

Journal of Competition Law and Economics, 2006, vol. 2, issue 4, 697-707

Abstract: To apply competition law, markets have to be defined, both in the product space and in the geographical space. A rigorous approach requires the estimation of cross price elasticities, which is always time-consuming and often impossible. This paper proposes a simple method for defining geographical markets when there are substantial transport costs. We derive results corresponding to a critical loss test and give an example of how the test can be applied using data from the Swedish pulpwood industry.

Date: 2006
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Persistent link: https://EconPapers.repec.org/RePEc:oup:jcomle:v:2:y:2006:i:4:p:697-707.

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Journal of Competition Law and Economics is currently edited by Nicholas Economides, Amelia Fletcher, Michal Gal, Damien Geradin, Ioannis Lianos and Tommaso Valletti

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