RESEARCH PAPER NO. 836

ANTITRUST ISSUES IN INTERNATIONAL COMPARISONS

OF MARKET STRUCTURE

by

JOSEPH G. HIRSCHBERG, ESFANDIAR MAASOUMI, DANIEL SLOTTJE & AUGUSTINE C. ARIZE

FEBRUARY 2002

Department of Economics. University of Melbourne. Melbourne Victoria 3010 Australia

ABSTRACT

The analysis and definition of markets, their structure, and concentration, especially for international comparisons, are complicated by a lack of adequate and comparable data. This is particularly so for multi-product and multinational firms. For instance, the U.S. Department of Commerce reports measures of industry concentration which do not embody either the control of subsidiary firms or the possible multinational nature for their ownership. Nor are these reported measures consistently based on sales data. Other countries produce similar reports, but these studies are generally not comparable to U.S. due, in part, to incompatible sector definitions. Few government-sponsored studies provide firm-level detail or timely information. Also, given the widespread multinational nature of many larger firms, an international analysis of ownership and operations is necessary. This paper addresses the issues encountered in the construction of international market data from the existing financial reports, and provides methods for the comparison of measures of market concentration and industry diversity across countries.

Using 1991 financial data, a firm level data set is constructed and used to compute comparable measures of market concentration and industry diversity in the food industries for the U.S. and European Community (EC). One innovation is to impute the distribution of sales of sub-code products by a firm based on simulations as well as nonparametric estimates of an existing data set.