Instructions
Upload this homework into the homework vaults in the IS no later than on 10/4 at 23.59.
The homework submitted after this date can be evaluated only if you have an excuse in the
IS for at least 3 working days in the week between the given lectures and seminars (from
these five: Wed, Thu, Fri, Mon, Tue) and the teacher has given you an alternative date when
you submit your homework. We expect that you write the homework on your own. Should
your answers resemble with the answers in someone else’s homework, we might deduct
points from your score. We appreciate the effort and thorough thinking (whether your
answers make sense, whether you have supported all your claims by careful argumentation,
whether your answers are informed by data). Try to formulate ideas as concisely as possible.
Certainly do not add any "dummy text" just in order to get closer to the maximum extent.
The final document can be inserted into the System in all standard formats (doc, docx, odt,
pdf, ...). Print your homework and take it to the seminar on 11/4. Title the document
Homework 4 (your name and surname will be added to the name of the document
automatically). Put your name and surname on the top of your homework.
Task (6 points, maximum 800 words)
Read the paper by Ivaldi and Verboven (2005) (see the study materials). Answer the
following questions. Please, use your own formulations. Do not copy sentences or
formulations from the paper:
1. Explain the difference between a hypothetical market power test (SSNIP) and an
actual market power test.
2. How was defined the relevant geographical market in the Volvo-Scania case? What
arguments did the Commission provide to support this definition?
3. Interpret the results in table 2.
4. How do they check the validity of the estimates? What is the meaning of the
parameter “r”?
5. What data do they use? How do they cope with the objection that listed prices differ
from actual transaction prices?
6. How do they calculate the results in table 5? Interpret the result presented in table 5.