Error risks under antitrust law enforcement: Effects of demand and supply shocks

Abstract

The paper examines the approaches to antitrust market definition for a class of situations characterized by significant imbalances due to supply and demand shocks. The problem of error analysis in antitrust law results from the insufficient experience in using tools for market analysis in a state other than equilibrium. The research methodology includes market theory and new institutional economics theory, as well as the methods of economic-statistical and econometric analysis. The empirical base of the research is the situation in the market for graphite electrodes in the period from 2017. The analysis deals with competition in the graphite electrode market in the context of the prevailing law enforcement practice. The authors take into account the availability of relevant information, as well as a sharp change in market conditions. The authors analyze the dynamics of the graphite electrode market before and after supply and demand shocks and identify the effects of market imbalance. The study provides a method for analyzing the product and geographical borders of the market with the indication of “bottlenecks” that can cause law enforcement errors. The results of the study can be useful for the sectoral analysis of markets and antitrust enforcement.

Keywords

• antitrust law
• product market boundaries
• geographic market boundaries
• exogenous shock
• graphite electrode