A Research Of Relevant Market Definition

As a concept different from market in economics, relevant market is established to counter monopoly. The emergence and development of relevant market in anti-monopoly have a close relationship with economic theories. In particular, the development of industrial organization theory combines ideas and methods in economics with anti-monopoly legal practice, thus paving a way for the combination of economics and laws, which, in turn, has moved the definition of relevant market ahead.The definition of relevant market is where the analysis of anti-monopoly cases starts and therefore plays a key role. The awards of anti-monopoly laws involve anti-monopoly practice. Such behaviors as collusion, misuse of market power by enterprises with advantages and judge of whether a merger of enterprise is in accordance with relevant regulations have something to do with the definition of relevant market. It's impossible to ascertain the effect of the parties involved on their competitors and consumers without a certain answer to the question what products and services are rivals. Only by making sure the place of competition and relevant market can we make a judgment of questions like market share and market concentration degree and in turn decide whether an enterprise has market power or is misusing such power. If relevant market is defined with a narrower scope, then an enterprise may enjoy a relatively large market share and more likely gain the status of market dominance. This may exclude meaningful competition. By contrast, if relevant market is defined with a wider scope, an enterprise may enjoy a relatively small market share. Such being the case, it is less likely to determine that an enterprise has market manipulation capability and degree of competition may be exaggerated. It is obvious that either too narrow or too wide definition of relevant market will lead to an inaccurate judgment of market share and market concentration degree.First of all, this paper discusses various methods of the relevant market definition, then comparatively analyses these methods to define the relevant market, then we reach conclusions as follows:in view of the complexity of the market definition, right now no method that has applicability in both theory and practice exists. In practice, relative officials must consider the feasibility and cost of market definition.This paper has four chapters. Chapter one introduces the research background and reviews the theories that offers a framework of this paper. Chapter two introduces various methods of market definition including:Cross Price Elasticity, LIFO/LOFI, Price Correlation Test, Granger Causality Test, SSNIP, Residual Demand Index, Stationarity Test, Regression Analysis, Broad Market. Chapter three is the comparative research of these methods, including the originations, applicability and the practice of relevant market definition. Chapter four is conclusion part, and the prospects of relevant market definition.