Wednesday, December 29, 2010
MARKET DELINEATION AND MERGER SIMULATION: A PROPOSED METHODOLOGY WITH AN APPLICATION TO THE ARGENTINE BISCUIT MARKET
Posted by D. Daniel Sokol
Germán Coloma (Universidad CEMA - Econ) analyzes MARKET DELINEATION AND MERGER SIMULATION: A PROPOSED METHODOLOGY WITH AN APPLICATION TO THE ARGENTINE BISCUIT MARKET.
ABSTRACT: This paper develops a methodology for estimating demand systems, calculating critical elasticities to be used in market delineation, and simulating the unilateral effects of horizontal mergers. The whole method is based on the use of estimated long-run price elasticities, and it is essentially the same when used to define relevant markets and when to simulate mergers. The paper also includes an empirical application of the method, which relies on data from the Argentine biscuit market.