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Authors

Brodskij V.

Degree
PhD in Technique, Public joint stock company «Mechel»
E-mail
victor.brodsky@mechel.com
Location
Moscow
Articles

On a system analysis to the concept of «competition»

This letter to the editor — a comment on an article of the U. V. Taranukha «On the question of universality, or a unified theory of competition» («Modern competition», 2010, № 6). It is shown that there is no «universal» definition of the term «competition», suitable for all tasks associated with this concept. It is shown that «a system analysis to competition,» proposed in the article, Y. V. Taranukha does not meet the principles of a system analysis to the interpretation of Stanford Optner–Nikanorov.
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Defining the boundaries of product markets by pairwise comparisons

Defining the boundaries of product markets by pairwise comparisons We offer a completely new approach to the design of product and geographical boundaries of product markets, which takes into account the organizational and informational aspects of antimonopoly regulation. We show a basic ambiguity of the term «product boundaries of the market». Reference to different interpretations of the concept discussed various algorithms for design (calculation) of the product market boundaries. We proposed a scheme of collecting and processing information about the boundaries of the market, which is the object of the antitrust investigation.
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Comparison of two methods to determine boundaries of product markets: hypothetical monopolist test and method of pairwise comparison

Two methods of determining the product type boundaries of product markets are compared: hypothetical monopolist test (SSNIP) and method of pairwise comparison. Advantages of pairwise comparisons method as opposed to SSNIP are highlighted.

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The choice of time intervals for the product market analysis

The article discusses the problem of choosing time interval for the product market analysis for the purposes of antitrust investigations. Decisions of the Antimonopoly body in cases concerning violations of the Antimonopoly legislation in some cases depend significantly on time frame choice for the analysis of the product market. The current Antimonopoly legislation clauses concerning the issue have two drawbacks. The first drawback is ambiguity of the wording “ insignificance of the market participants share change within the interval analysis».The second is the requirement that all parameters of the market correspond with the same time interval The objective of this article is to propose and explain an algorithm of selecting multiple time intervals for the product market analysis, which would allow to eleminate regulatory drawbacks. The main idea of the proposed algorithm is as follows. Product market analysis, which is the object of antitrust investigation, may span multiple time intervals, if within each of these intervals parameters that allow for distinguishing the given market from all other markets remain unchanged. Implementation of this idea is based on the conceptual model of the product market that embraces several key parameters of the market. This conceptual model enables comparison of the market that existed in a particular time interval and was an object of the antitrust investigation with another market, which also existed in past, but at a different time period. If the conceptual models of the two markets coincide it is suggested the market analysis should include both time intervals. In theory, there may be several such time intervals. Based on the conceptual model of the market a fundamentally new method to assess stability of participants’ market shares over time was elaborated. This method eliminates inherent ambiguity of “ insignificance of the market participants share change within the interval analysis» clause. The final part of the article discusses a number of interrelated issues: necessity to include several time intervals in the base market analysis, different interpretations of the»optimal duration of the market analysis period»,conceptual model advantages as opposed to the verbal market model, practical applicability of the proposed method to assess stability of participants’ market shares.
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A simple solution algorithm based on SSNIP task on the borders of the commodity market

The problem of the boundaries of the commodity market is the central economic issue in most antitrust investigations. Hypothetical monopolist test (abbreviated SSNIP) is considered to be a basic reference method of solving this problem. There are various algorithms for solving the problem about the boundaries of the product market on the basis of SSNIP. The regulatory algorithm of SSNIP is established by the order of FAS of Russia dd. 28.04.2010, which regulates procedure of analysis of the status of competition in the product market. In practice, the regulatory algorithm of SSNIP turns out to be complicated and costly even for a small number of the studied products. Another drawback of the regulatory algorithm of SSNIP — its ambiguity, the blur and the lack of numerical examples demonstrating the transition from initial data to the configuration of the boundaries of the market. This allows in some cases based on the same raw data to form mutually exclusive boundaries of the commodity market which proves to be a source of significant business risks in the practice of antitrust regulation. The paper proposes a modified algorithm of SSNIP to eliminate the main shortcomings of the regulatory algorithm of SSNIP. Namely, to reduce significantly the volume of data requested from respondents, and to prenest a transition from the raw data to the configuration of the boundaries of the market in a compact and transparent table. In the course of formation and processing of the raw data the modified algorithm of SSNIP provides the following distribution of responsibilities between the regulator and the participants of the survey. The regulator generates and delivers to the participants of the survey a list of pairs of goods that are subject to comparison in terms of their substitutability; provides the list of customers and list of vendors involved in the survey; processes the raw data received and presents the results in a standardized tabular form. The survey participants provide in a standardized format raw data for actual and hypothetical sales volumes for each pair of matched products as well as data on price and cost of goods in respect of which an antitrust investigation is conducted. The article presents illustrative numerical examples which allows one to compare normative SSNIP algorithm and proposed modified algorithm of SSNIP.
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