• Media type: E-Book
  • Title: Multi-Product Critical Loss : Allowing for Varying Margins, Prices, and Quantities in the Candidate Product Market
  • Contributor: Ulrick, Shawn W. [Author]; Williams, Mark D. [Author]
  • Published: [S.l.]: SSRN, [2023]
  • Extent: 1 Online-Ressource (25 p)
  • Language: English
  • DOI: 10.2139/ssrn.4412027
  • Identifier:
  • Keywords: Critical loss ; antitrust ; product market ; differentiated products
  • Origination:
  • Footnote: Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments April 6, 2023 erstellt
  • Description: Critical loss analysis is a way to directly implement the hypothetical monopolist test for a product market. The first step of critical loss analysis calculates the “critical loss,” which is the maximum loss in sales that the hypothetical monopolist controlling a candidate market could incur (given the size of the SSNIP) before the price increase would reduce its profits. Much of the critical loss literature has focused on finding the actual loss, with the critical loss described as “just arithmetic.” Indeed, the critical loss is just arithmetic, but there is room for improving it. As typically applied, the critical loss assumes all products have the same margin. In effect, this approach treats the products in the candidate market as a single, representative product. The goal of this paper is to develop the critical loss for products having different margins, initial prices, and initial quantities. If initial prices and quantities vary, the one‐product critical loss formulae will be inappropriate, even if the percentage margin is the same across all products. Finally, we address issues in the implementation of critical loss analysis. Our paper is meant to be accessible to the practitioner
  • Access State: Open Access