Can we conclude that relevant geographic market is smaller
Course:- Macroeconomics
Reference No.:- EM13212513

Assignment Help
Expertsmind Rated 4.9 / 5 based on 47215 reviews.
Review Site
Assignment Help >> Macroeconomics

A firm, which is the only supplier of a good located in a particular town, is accused of engaging in anticompetitive tactics in order to protect its monopoly position in that town. As part of its defense, the firm has argued that the geographic antitrust market includes a larger neighbouring city with multiple firms. The defense offers two pieces of evidence in support of its larger geographic market: (1) the correlation coefficient between the price in the town and the nearby city is 0.95, looking at weekly prices for recent years, and (2) a recent survey of consumers in the town, conducted by the firm's marketing branch, revealed that a 5% increase in prices above current levels would be unprofitable because too many consumers would switch to purchasing from the city. In this larger geographic market, the firm's market share is low. Therefore, the defense claims, the firm does not have the market power necessary to carry out anticompetitive practices or to make them worthwhile. Offer a critique of the firm's arguments regarding market definition. Can we conclude that the relevant geographic market is larger than the town based on the evidence presented?

Put your comment

Ask Question & Get Answers from Experts
Browse some more (Macroeconomics) Materials
Using the midpoint formula, calculate the price elasticity of demand for the following problem: Calculate the income elasticity of demand using the general formula for elastic
Interest-Rate Parity. If the interest rates on the 30-day instruments in the US and Switzerland are 12 and 10 percent (annualized), respectively, what is the correct price of
Define GDP and discuss how it is measured. Compare and contrast the expenditure versus income approach. What are some of the drawbacks of using GDP to measure economic well-
Despite the tremendous economic strides made during our current era of globalization, our world is split largely between those who have benefited greatly from globalization
Impact of technology advance a monopolist has the following demand function: Solve for the price and quantity that the monopolist would choose to minimize its profit. And als
A country has a constant population, capital stock, and technology. In 2010, real GDP was $ 300 million, the quantity of money was $60 million, and the velocity of the circu
Connor knows that the two 'P' represent the key to sustained economic development for low income countries. The two 'P' are labour productivity growth and poverty decrease.
Illustrate what will be the impact on American business, in terms of how businesses create value by integrating the production and distribution of goods, serivces, and infor