A Proposed Method for Analyzing Competition Among Differentiated Products

12 Pages Posted: 7 Mar 2010

See all articles by Jerry A. Hausman

Jerry A. Hausman

Massachusetts Institute of Technology (MIT) - Department of Economics; National Bureau of Economic Research (NBER)

Gregory K. Leonard

Charles River Associates

J. Douglas Zona

Charles River Associates (CRA)

Date Written: 1992

Abstract

Economists recognize that conventional measures of market concentration that may be appropriate when relevant products are homogeneous are inappropriate, except under very special circumstances. Meaningful analysis in a market with differentiated products must recognize the fact that all relevant products do not compete to the same degree, since the products vary in their degree of substitutability. In this article, we propose an alternative approach to analyzing competition among differentiated products. This approach examines the full structure of demand in a market by including all products of interest (rather than drawing an exclusive boundary) and then determining the competitive importance of each product by its degree of substitution with the products of the merging firms.

Keywords: Competition, Differentiated Products

JEL Classification: L4

Suggested Citation

Hausman, Jerry A. and Leonard, Gregory K. and Zona, J. Douglas, A Proposed Method for Analyzing Competition Among Differentiated Products (1992). Antitrust Law Journal, Vol. 60, 1992, Available at SSRN: https://ssrn.com/abstract=1565807

Jerry A. Hausman

Massachusetts Institute of Technology (MIT) - Department of Economics ( email )

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National Bureau of Economic Research (NBER)

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Gregory K. Leonard (Contact Author)

Charles River Associates ( email )

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J. Douglas Zona

Charles River Associates (CRA) ( email )

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Suite 21
Oakland, CA 94618
United States

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