| What two dimensions does a market consist of? | A market contains two dimensions:
1. Product dimension - close substitute or complementary products in consumption and production
• Substitutes in consumption: large and positive CED
• Complements in consumption: large and negative CED
• Substitutes in production: large and negative CES
• Complements in production: large and positive CES
2. Geographic dimension - change in a product’s price in one geographic location significantly affects the price in another location
• Local regional, national, continental, or global
• Spatial cross-price elasticities can be used |
| How is an industry defined? | Industry - firms producing similar products, using similar technology, and using inputs from the same factor markets |
| How is a market defined? | Market - contain supply/production and demand/consumption |
| How are industries clasified? | Using codes developed by statistical offices:
NAICS – North American Industry Classification System
SIC – Standard Industrial Classification
NACE – Statistical Classification of Economic Activities in the EC DB – Dansk Branchekode (NACE with further subdivisions) |
