Thesis (PhD)--Stellenbosch University, 2011. / ENGLISH ABSTRACT: Delineating the relevant product and geographic market is an important first step in competition inquiries,
as it permits an assessment of market power and substitutability. Critics often argue that market definition
is arbitrary and increasingly unnecessary, as modern econometric models can directly predict the
competitive effects of a merger or anti-competitive practice. Yet practical constraints (such as limited
data) and legal considerations (such as case law precedence) continue to support a formal definition of the
relevant market. Within this context, this dissertation develops three tools to improve market definition:
two empirical tools for cases with limited data and one conceptual decision-making tool to elucidate
important factors and risks in market definition.
The first tool for market definition involves a systematic analysis of consumer characteristics (i.e. the
demographic and income profiles of consumers). Consumer characteristics can assist in defining markets
as consumers with similar characteristics tend to switch to similar products following a price rise.
Econometric models therefore incorporate consumer characteristics data to improve price elasticity
estimates. Even though data constraints often prevent the use of econometric models, a systematic
analysis of consumer characteristics can still be useful for market definition. Cluster analysis offers a
statistical technique to group products on the basis of the similarity of their consumers. characteristics. A
recently concluded partial radio station merger in South Africa offers a case study for the use of consumer
characteristics in defining markets.
The second tool, or set of tools, for defining markets involves using tests for price co-movement. Critics
argue that price tests are not appropriate for defining markets, as these tests are based on the law of one
price - which tests only for price linkages and not for the ability to raise prices. Price tests, however, are
complements for existing market definition tools, rather than substitutes. Critics also argue that price tests
suffer from low statistical power in discriminating close and less close substitutes. But these criticisms
ignore inter alia the role of price tests as tools for gathering information and the range of price tests with
better size and power properties that are available, including new stationarity tests and autoregressive
models. A recently concluded investigation in the South African dairy industry offers price data to
evaluate the market definition insights of various price tests.
The third tool is conceptual in nature and involves a decision rule for defining markets. If market
definition is a binary classification problem (a product is either 'in' or 'out' of the market), it faces risks of misclassification (incorrectly including or excluding a product). Analysts can manage these risks using
a Bayesian decision rule that balances (1) the weight of evidence in favour of and against substitutability,
(2) prior probabilities determined by previous cases and economic research, and (3) the loss function of
the decision maker. The market definition approach adopted by the South African Competition Tribunal
in the Primedia / Kaya FM merger investigation offers a useful case study to illustrate the implementation
of such a rule in practice. / AFRIKAANSE OPSOMMING: Mededingingsake neem gewoonlik 'n aanvang met die afbakening van die relevante produk- en
geografiese mark. Die markdefinisie-proses werp dikwels lig op markmag en substitusie-moontlikhede,
en ondersteun dus die beoordeling van 'n mededingingsaak. Markdefinisie word egter deur kritici as
arbitrer en selfs onnodig geag, veral aangesien ekonometriese modelle die uitwerking van 'n
samesmelting of 'n teen-mededingende praktyk op mededinging direk kan voorspel. Tog verkies
praktisyns steeds om markte formeel af te baken op grond van sowel praktiese oorwegings (insluitend
databeperkings wat ekonometriese modellering bemoeilik) as regsoorwegings (insluitend die rol van
presedentereg). Hierdie proefskrif ontwikkel dus drie hulpmiddels vir die definisie van markte: twee
empiriese hulpmiddels vir gevalle waar data beperk is sowel as 'n denkhulpmiddel om o.a. risiko's
rondom markdefinisie te bestuur.
Die eerste hulpmiddel vir die definisie van markte behels die sistematiese analise van
verbruikerseienskappe, insluitend die demografiese en inkomste-profiel van verbruikers.
Verbruikerseienskappe werp lig op substitusie, aangesien soortgelyke verbruikers neig om na soortgelyke
produkte te verwissel na aanleiding van 'n prysstyging. Ekonometriese modelle maak derhalwe van data
omtrent verbruikerseienskappe gebruik om beramings van pryselastisiteit te verbeter. Hoewel
databeperkings dikwels ekonometriese modellering beperk, kan verbruikerseienskappe op sigself steeds
nuttig wees vir die afbakening van die mark. Trosanalise bied 'n statistiese metode vir 'n stelselmatige
ondersoek van verbruikerseienskappe vir markdefinisie, deurdat dit produkte op grond van gelyksoortige
verbruikerseienskappe groepeer. 'n Onlangse ondersoek in Suid-Afrika rakende die gedeeltelike
samesmelting van Primedia and Kaya FM radiostasies bied data om die gebruik van trosanalise en
verbruikerseienskappe vir markdefinisie-doeleindes te illustreer.
Die tweede hulpmiddel vir markdefinisie behels statistiese toetse vir verwantskappe tussen prystydreekse
van verskillende produkte of streke. Hierdie prystoetse is gebaseer op die wet van een prys en beklemtoon
prysverwantskappe eerder as die vermoë om pryse te verhoog (wat die uiteindelike fokus in
mededingingsbeleid is). Hierdie klem verminder egter nie noodwendig die insigte wat prystoetse bied nie,
aangesien markdefinisie dikwels 'n omvattende analise verg. Prystoetse se statistiese
onderskeidingsvermoe word ook dikwels deur kritici as swak beskryf. Hierdie tegniese kritiek beskou
prystoetse as eng-gedefinieerde hipotesetoetse eerder as hulpmiddels vir die verkenning van
substitusiepatrone. Voorts ignoreer hierdie tegniese kritiek 'n verskeidenheid nuwe prystoetse met beter
onderskeidingsvermoë, insluitend nuwe toetse vir stasioneriteit en nuwe autoregressiewe modelle. 'n Onlangse mededingingsondersoek in die Suid-Afrikaanse melkindustrie verskaf prysdata om die
verrigting van verskillende prystoetse vir geografiese markdefinisie te ondersoek.
Die derde hulpmiddel vir die definisie van markte behels 'n besluitnemingsreël. Hiervolgens word
markdefinisie as 'n binêre klassifikasieprobleem beskou, waar 'n produk of streek 'binne' of 'buite' die
mark geplaas moet word. Gegewe dat hierdie klassifikasie onder toestande van onsekerheid geskied, is
markdefinisie blootgestel aan risiko's van wanklassifikasie. Praktisyns kan hierdie risiko‟s bestuur deur
gebruik te maak van 'n Bayesiaanse besluitnemingsreël. Sodanige reël balanseer (1) die gewig van
getuienis ten gunste van en teen substitusie, (2) a priori waarskynlikhede soos bepaal deur vorige
mededingingsake en akademiese navorsing, en (3) die verliesfunksie van die besluitnemer. Die
benadering van die Suid-Afrikaanse Mededingingstribunaal in die saak rakende die gedeeltelike
samesmelting van Primedia en Kaya FM bied 'n nuttige gevallestudie om hierdie beginsels te
demonstreer.
| Identifer | oai:union.ndltd.org:netd.ac.za/oai:union.ndltd.org:sun/oai:scholar.sun.ac.za:10019.1/18020 |
| Date | 12 1900 |
| Creators | Boshoff, Willem Hendrik |
| Contributors | Du Plessis, Stan, Theron, Nicola, Stellenbosch University. Faculty of Economic and Management Sciences. Dept. of Economics. |
| Publisher | Stellenbosch : Stellenbosch University |
| Source Sets | South African National ETD Portal |
| Language | en_ZA |
| Detected Language | Unknown |
| Type | Thesis |
| Format | 159 p. : ill. |
| Rights | Stellenbosch University |
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