Aug. 5, 2013

A cost-effective method to aggregate non-substitutable goods within the same relevant market

By Julien Pellefigue and Paul Le Coz

The definition of the relevant market is a crucial step in competitive analysis as it helps calculate the market share of each players and obtain an indication of their market power. Conventionally, two properties are aggregated in the same relevant market when they are substitutable from the demand point of view, that is to say when they meet the same overall need. In some cases, mainly for practical reasons, however, it happens that non-substitutable goods are aggregated in the same relevant market. While the law seems to give little specific guidance for this exercise, TERA Consultants has developed a quantitative approach based on the concept of transaction complementarity.

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