Market Definition: A Sensitivity Analysis
Abstract
Market definition holds significant importance in antitrust cases, yet achieving consensus on the correct approach remains elusive. As a result, analysts routinely entertain multiple market definitions to ensure the resilience of their conclusions. I propose a simple framework for conducting organized sensitivity analysis with respect to market definition. I model candidate market definitions as partially ordered and use a Hasse diagram, a directed acyclic graph representing a finite partial order, to summarize the sensitivity analysis. I use the Shapley value and the Shapley-Shubik power index to quantify the average marginal contribution of each firm in driving the conclusion. I illustrate the method's usefulness with an application to the Albertsons/Safeway (2015) merger.
Keywords
Cite
@article{arxiv.2407.12774,
title = {Market Definition: A Sensitivity Analysis},
author = {Paul S. Koh},
journal= {arXiv preprint arXiv:2407.12774},
year = {2025}
}