Mark allocations should guide you as to how much time to devote to each question and the proportion of the word allowance to use.
1. The availability of sophisticated econometric techniques for quantifying the effects of business conduct has rendered market definition irrelevant and unnecessary. Do you agree? Carefully explain your reasoning.
[4 marks]
2. Market definition focuses on shifts along the demand and supply curves, rather than movements of those curves. Why is this the case?
[3 marks]
3. A SSNIP is usually set a 5% or 10%. What is the likely effect of applying a 10% rather than a 5% SSNIP?
[2 marks]
4. Why is there a temporal dimension to market definition? Use actual or hypothetical examples to illustrate your answer.
[4 marks]
5. In an increasingly globalised world, under what circumstances might the geographic dimension of a market be found to be national rather than global?
[7 marks]
6. A public hospital, which treats both fee paying and non-fee paying patients, has allegedly engaged in anti-competitive exclusive dealing. Its policy is to require all hospital in-patients to acquire pathology tests from the hospital’s own pathology department rather than from external suppliers. How would you define the market to be used to analyse the conduct? Explain your reasoning.
[5 marks]
7. ThoroughThreads Pty Ltd, a major clothing store based in Melbourne, finds it is losing a significant amount of business to online sales. It has introduced its own on-line shopping option and this seems to have stabilised sales. However, it is concerned about the number of customers who come into the store to try on clothes, only then to leave the store without buying anything. The store incurs costs due to these non-customers, including – in some cases – damage to merchandise.
The store manager instructs sales staff to speak to customers as they return from the fitting rooms to find out why they are not purchasing the garments they have tried. After some weeks, it becomes clear that a significant proportion of these non-purchasers are intending to buy on-line and are just checking out the products ahead of purchase. Further inquiries indicate that about 70 per cent of these on-line purchases will be made from other retailers. Store management decides to impose a fee of $20 for use of the store’s fitting rooms. The fee will be deducted from any purchases in-store.
Some consumers complain to the competition authority claiming that the store is discriminating against on-line buyers and that this is an abuse of the store’s market power. Irrespective of the merits of this claim, if it were to be subject to a competition assessment, what do you consider would be the appropriate geographic dimension of the market? What factors would you consider to determine this? [Make explicit any additional factual assumptions that you think necessary in order to answer these questions.]
[5 marks]
Please use AGLC for Paper Format – referencing style
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