Tamer Çetin is a visiting lecturer at the Northeastern University, Boston. He is grateful to Christopher Brown and two
anonymous referees for their valuable comments. This research was supported in the scope of Project No. 2016-02-01-
KAP01 by the Division of Research of Yildiz Technical University (Turkey), when Çetin was an associate professor at
that university. The earlier versions of this article were presented at the XVII April International Academic Conference
on Economic and Social Development, held at the Higher School of Economics in Moscow (Russia) in 2016 and at the
Fourth European Academic Research Conference on Global Business, Economics, Finance and Banking (EAR16 Swiss
Conference) in Zurich (Switzerland) the same year. The author is grateful to the participants for their valuable
comments. The responsibility for any errors remains with the author.
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©2017, Journal of Economic Issues / Association for Evolutionary Economics
JOURNAL OF ECONOMIC ISSUES
Vol. LI No. 4 December 2017
DOI 10.1080/00213624.2017.1391597
Toward a Wider Analysis of Market Definition: Theory and
Evidence from the Turkish Telecommunications Industry
Tamer Çetin
Abstract: This article develops a novel approach to the analysis of market
definition. The article empirically investigates the main components of market
definition, such as market power, substitution, and the simultaneous interaction
between the demand and its determinants for the fixed and mobile voice services.
To this end, I employ the multivariate Johansen cointegration methodology and
analyze the Turkish voice telecommunications industry. While the VECM analysis
confirms the presence of a simultaneous long-term causality relationship among the
variables, the Johansen normalization results reveal demand elasticities that enable
the analysis of market power and fixed-to-mobile substitution. My findings suggest
that the fixed and mobile voice services, which are traditionally viewed as separate
markets, can be defined as products that compete in the single market.
Keywords: cointegration methodology, (de)regulation, fixed-mobile substitution,
market definition, market power
JEL Classification Codes: C32, L43, L51, L96, K21
Market definition has long been a very controversial field in antitrust cases (Baker
2007; Kaplow 2014; Massey 2000; Tardiff and Weisman 2009; Werden 2014). Even
though different approaches to market definition have been presented so far,
consensus has not been achieved on which approach is the best to define a market.
The aim of market definition is to understand market power and its anticompetitive
effects. Thus, the Lerner index, the market shares of firms, and market concentration
have been used as traditional tools to measure market power. However, these
approaches suffer from some shortcomings when used to analyze market definition