Thesis (Ph.D.) -- Middle East Technical University, 2010.

Includes bibliographical referances.

LITERATURE SURVEY ON THE USE OF DEMAND MODELS IN ECONOMICS OF COMPETITION LAW 7 2.1. Introduction 7 2.2. Product Space Models 8 2.2.1. Linear demand system 8 2.2.2. Constant elasticity demand system 8 2.2.3. CES demand system 8 2.2.4. Flexible linear systems 8 2.3. Characteristics Space Models 11 2.3.1. Multinomial logit models 11 2.3.2. Distance-metric (DM) approach 14 2.4. Conclusion 14 CHAPTER 3 DATA 16 CHAPTER 4 ESTIMATION OF THE ELASTICITIES OF DEMAND AND DEFINITION OF THE RELEVANT PRODUCT MARKET IN THE TURKISH BEVERAGE INDUSTRY 25 4.1. Introduction 25 4.2. Previous Demand Studies for Turkey 27 4.3. Two-Stage Budgeting For Beverage Products in Turkey 27 4.4. Almost Ideal Demand System (AIDS) 30 4.4.1. Restrictions of the economic theory 32 4.4.2. Aggregation over consumers 33 4.4.3. Linear approximation for AIDS (LAIDS) 37 4.5. A Demand System for Beverages in Turkey 40 4.5.1. Model specification 40 4.5.2. Data for the LAIDS model 42 4.5.3. Descriptive statistics 44 4.5.4. Endogeneity of prices and instrumental variables 50 4.6. Estimation Methods 51 4.7. The Results 54 4.7.1. Testing endogeneity of regressors (Hausman test) 55 4.7.2. Testing the instrumental variables 56 4.7.2.1. Testing the relevance of instruments 56 4.7.2.2. Testing the validity of instruments 57 4.7.3. Estimation results from restricted 3SLS model 58 4.7.4. Testing theoretical restrictions of homogeneity and symmetry ..70 4.8. Elasticities of Demand and Expenditure 73 4.8.1. Expenditure elasticities of demand 73 4.8.2. Price elasticities of demand 75 4.9. Relevant Product Market Definition: An Application of the SSNIP Test 79 4.10. Conclusion of Chapter 4 82 CHAPTER 5 ESTIMATION OF THE DEMAND ELASTICITIES AND THE MARKET POWER IN TURKISH COLA INDUSTRY AT PRODUCT LEVEL 85 5.1. Introduction 85 5.2. Data Used in Estimating Demand for Cola Products 86 5.3. The Simple and Nested Logit Models for Demand Estimation 98 5.3.1. Inverting the market share function 99 5.3.2. The simple logit model 100 5.3.3. The nested logit model '03 5.4. Estimation 106 5.5. Instrumental Variables l^8 5.6. Results of the Estimations 110 5.7. Price Elasticities of Demand ,22 5.7.1. Elasticities from the simple logit models 123 5 7 2. Elasticities from the nested logit models 123 5.7.3. Analysis of elasticities 124 5.8. Conclusion for Chapter 5 139 CHAPTER 6 MEASURING THE DEGREE OF MARKET POWER AND PREDICTING THE EFFECTS OF A HYPOTHETICAL MERGER IN TURKISH COLA INDUSTRY 142 6.1. Introduction 142 6.2. The Price-Cost Margins 143 6.3. Merger Simulation 148 6.3.1. The technique and the scope of the merger simulation 148 6.3.2. Results of the merger simulation 150 6.4. Conclusion for Chapter 6 159 CHAPTER 7 CONCLUSION 162 REFERENCES 169 APPENDICES APPENDIX A 175 List of products 175 APPENDIX B .ZZZZZZZ\76 Results from the restricted OLS, 2SLS, SUR and 3SLS models 176 APPENDIX C ; 202 Results from the unrestricted 3SLS Model 202 APPENDIX D ^Z'.'Z.'"'209 Derivation of elasticities of demand with Tornqvist price index in LAIDS model ?nq APPENDIX E ZZZZZZZZZZZ212 APPENDIX^°fC°la PFOdUCtS in CVery P°int °f observation ..."..'.""212 APPENDIX SimplC nCSted l0git m0ddS Results of the merger simulation