THE RELEVANT TEMPORAL MARKET DEFINITION IN ANTITRUST ANALYSIS

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Published: Jun 7, 2018
https://doi.org/10.30525/2256-0742/2018-4-1-68-76

  Anzhelika Gerasymenko

  Svitlana Afendikova

Abstract

The purpose of the paper is to compare various theoretical approaches to the relevant temporal market definition, collecting the arguments for their implementation under the different kinds of antitrust cases. It is vital for the markets with peak demand (transport, electricity, markets of intergenerational products) or discreet supply (agriculture). Methodology. The survey is based on the theoretical and graphical modelling of product space perception by consumers. It investigates changes of the latter under different marketing strategies of a seller. Statistical methods are used to analyse trends of demand and prices for iPhones’ changes, as well as dynamics of electricity consumption. Results. The paper reveals two facing approaches to the definition of relevant temporal market: 1) the discrete one that provides a short-run analysis of products’ substitutability and combines only those time periods that are characterized by a stable balance of demand and supply, as well as stable market equilibrium; 2) the coherent one that provides a long-run analysis of cyclical variation of the market. This cycling is based on the awareness of consumers and producers of intertemporal substitutability of products. The authors use the model of intertemporal competition to explain principles of these approaches and apply it to the iPhone market analysis. They conclude that the coherent approach must be applied to the temporal market definition for the products with elastic demand. Inelastic demand brings the necessity to apply the discrete approach to the temporal market definition. These conclusions cannot be applied to regulated markets. The system of government regulation is the main determinant of the temporal boundaries of such markets. Practical implications. The results of this research can be used by competition agencies in antitrust cases to define the relevant temporal market, where the violations of antitrust legislation can occur. The correct definition of the market is the first step of structural analysis under antitrust cases that determinates the correctness of its next steps and finally – accurate labelling of an antitrust violation. Value/originality. The paper grounds capability of both (discrete and coherent) approaches to the relevant temporal market definition, determines the factors that define what the approach must be chosen, as well as the exceptions from the rule.

How to Cite

Gerasymenko, A., & Afendikova, S. (2018). THE RELEVANT TEMPORAL MARKET DEFINITION IN ANTITRUST ANALYSIS. Baltic Journal of Economic Studies, 4(1), 68-76. https://doi.org/10.30525/2256-0742/2018-4-1-68-76
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Keywords

relevant market, temporal market, intertemporal competition, peak and off peak services, intergenerational products

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Issue
Vol. 4 No. 1 (2018): Baltic Journal of Economic Studies