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« A SSNIP Test for two-sided Markets » by Lapo Filistrucchi

« A SSNIP Test for two-sided Markets » by Lapo Filistrucchi. Discussant: Bruno Karoubi Télécom Paris. The Relevant Market problem. Defining the relevant market is a major issue for antitrust authorities.

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« A SSNIP Test for two-sided Markets » by Lapo Filistrucchi

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  1. « A SSNIP Test for two-sided Markets » by Lapo Filistrucchi Discussant: Bruno Karoubi Télécom Paris

  2. The Relevant Market problem • Defining the relevant market is a major issue for antitrust authorities. • All the more true when goods are horizontally differentiated (wrist watches and pocket watches, proprietary payment cards vs. non proprietary payment cards…). • Market power is inversely proportional to price elasticity. • Evaluating empirical price elasticities. • Which set of goods can be deemed to constitute an independent market? mergers’ interests is to consider it as big as possible.

  3. The SSNIP Test is irrelevant for TSM • The SSNIP test: • the relevant market is supposed to be as small as possible. • simulating the effect of a small but significant increase of price (cf. Federal Trade Commission and Department of Justice guidelines). • if this price increase reduces profits, the relevant market is extended to a marginal set of goods and the first step is repeated. • The relevant market is the smallest one in which a price increase has no effect on profits.

  4. Adapting the SSNIP test to TSMs • Two examples of TSM: “payment card” (PC) (when there is a transaction between two end consumers) and “media type” (when there is no transaction). • While a good relevant to one side is necessarily relevant to the other in PC market type, this is not necessarily true in M-type market.

  5. Future researches • Application of the SNIPP test to TSM in PC and M-type markets. • The data set that will be used for M-type markets has already been collected, while surveys are carried out in the Netherlands in order to build the one that will be used for PC-type markets.

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