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arXiv · 2407.12774

Market Definition: A Sensitivity Analysis

Paul S. Koh
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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.

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Paul S. Koh. 2024-07-17. Market Definition: A Sensitivity Analysis. https://arxiv.org/abs/2407.12774

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