Tilburg Law and Economics Center

TILEC Seminar: Assaf Kovo (Hebrew University)

Date: Time: 10:45 Location: M 1003

Inferring Market Definitions and Competition Groups From Empirically-Estimated Demand Systems: A Practitioner’s Guide

Assaf Kovo serves as a Senior Economist at the Israeli National Economic Council (Prime Minister's Office) since 2018, covering issues related to agribusiness and food and FMCGs prices. Also, he is part of the Strategy team, formulating medium and long-term economic and social strategies for the State of Israel.  Other responsibilities include promoting effectiveness studies of government programs, the impact of the exchange rate on the volume of exports from Israel, and leading the Economics section of the training program for the senior staff in the Israeli civil service.

Prior to his work at the Prime Minister's Office Assaf served as a Senior Team Leader at the Israeli Antitrust Authority and dealt with various sectors, including food, agriculture, retail and wholesale as well as issues related to commercial and personal imports.
Assaf holds a Ph.D. in Economics from the Hebrew University in Jerusalem and his research is mainly in the field of Industrial Organization.

Inferring Market Definitions and Competition Groups From Empirically-Estimated Demand Systems:  A Practitioner’s Guide

Abstract

This paper addresses several gaps in the economics and antitrust literature concerning the task offormally defining the boundaries of a market. First, we provide a formal treatment of the “submarket”concept referred to in seminal court rulings.  To that end, we define a concept termed “competitiongroup” (CG) and formally relate it to the familiar SSNIP test.  Second, we provide a methodologyfor performing the SSNIP test and constructing CGs using an empirically estimated demand system,addressing several practical difficulties that have not been discussed in the extant literature.  Ourapproach highlights the practical virtues of the nested logit model of demand in this context.  Finally,we  provide  a  detailed  description  of  the  application  of  this  methodology  by  the  Israeli  AntitrustAuthority in its investigation of the country’s dairy market.