GEOGRAPHIC PRICE INTERDEPENDENCE AND THE EXTENT OF ECONOMIC MARKETS

Market delineation research has generally been based on theories of monopoly and competition, but most studies of market structure and performance and most competition law cases are concerned with oligopolies. Key predictions of monopoly/perfect competition theory do not hold under spatially interrelated oligopoly, while other relationships that neither monopoly nor perfect competition predicts are expected in such oligopolies. Thus, analysis of economic market delineation is extended to include spatial oligopoly. A dynamic analysis of price data is then employed to examine evidence used to define the geographic market in a competition law case in light of the theoretical predictions. -Authors