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This paper estimates a multi-level demand system based on Hausman, Leonard and Zona (1994) and apply the results to delineate the antitrust market for soft drinks regarding the KFTC’s cartel case in 2009. The results show that the market definition should be narrower than the soft drink as a whole, which is in contrast with the claim made by the KFTC. The market should be most likely to be even narrower than three subgroups&\#8210\;carbonated drinks, fruit drinks, and other drinks. Furthermore, one cannot completely rule out that subdivision into 11 lower product groups would not still define the proper antitrust markets for soft drinks. These results support the decision of the Korean Supreme Court that the case should be reversed and remanded on the grounds that market definition is inappropriate.

key words: market definition, soft drink market, demand estimation

Namhoon Kwon
Professor, Department of Economics, Konkuk University

(The Korean Journal of Industrial Organization, Vol. 29, December, 2021)