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Market Definition: A Sensitivity Analysis

Paul S. Koh
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Paul S. Koh: Yonsei University

No 2025rwp-262, Working papers from Yonsei University, Yonsei Economics Research Institute

Abstract: Market definition holds significant importance in antitrust cases, yet achieving consensus on the correct approach remains elusive. As a result, analysts routinely entertain multiple market definitions to ensure the resilience of their conclusions. I propose a simple framework for conducting organized sensitivity analysis with respect to market definition. I model candidate market definitions as partially ordered and use a Hasse diagram, a directed acyclic graph representing a finite partial order, to summarize the sensitivity analysis. I use the Shapley value and the Shapley-Shubik power index to quantify the average marginal contribution of each firm in driving the conclusion. I illustrate the method's usefulness with an application to the Albertsons/Safeway (2015) merger.

Keywords: Market definition; sensitivity analysis; partial order; Hasse diagram; Shapley value (search for similar items in EconPapers)
Pages: 29pages
Date: 2025-08
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