Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

I'd argue that a price change isn't signicant unless it's big enough for a consumer to notice , so maybe 10% or even 20% in

image text in transcribed
I'd argue that a price change isn't signicant unless it's big enough for a consumer to notice , so maybe 10% or even 20% in some cases (20% of an item that costs 5 cents is 1 cent ). In this part ofthe question, I'm going to let you Choose what you use as your 'sm all but significant' price increase. You can use the Competition Bureau's 5%, ifyou like, but you can also modify that to something that makes more sense for your particular product Choose your Small but Signicant Price Change Briefly justify your choice c. We now begin the main part of the market definition process .Quoting from the merger enforcement guidelines "For each candidate market, the analysis proceeds by determining whether a hypothetical monopolist controlling the group of products in that candidate market would protably impose a SSNIP , assuming the terms of sale of all other products remained constant . If the price increase would likely cause buyers to switch their purchases to other products in sufficient quantity to render the price increase unprofitable , the postulated candidate market is not the relevant market , and the next -best substitute is added to the candidate market ." A SSNIP is a Small but Significant Non-transitory Increase in Price. In other words, you're asking, "If someone controlled all the products I've listed so far, and ONLY those products , would they be able to increase their revenue by raising their prices by that much for a year, or would they lose too many customers ?" The first time you're able to answer , 'Yes, they'd be able to increase their revenue', you're done. That's your m arket. W henever you answer 'No, they'd lose too many customers', add the next closest substitute to the list, and try again . Iasked you to choose a product that didn't pass the hypothetical monopolist test all on its own , so there's going to be at least one other product in your market For each product that you add to the list, explain why they're the next closest substitute, and explain why your collection of products does or does not pass the hypothetical monopolist test after adding in that product .Restrict your search for substitutes to the site you listed in part a

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

The Routledge To Global Political Economy Conversations And Inquiries

Authors: Ernesto Vivares

1st Edition

1351064525, 9781351064521

More Books

Students also viewed these Economics questions

Question

1. Too reflect on self-management

Answered: 1 week ago

Question

Food supply

Answered: 1 week ago