If you were an economist for Mattel, How would you answer this….?
If you were an economist for Mattel, manufacturer of the doll Barbie, which was
making an unsolicited bid to take over Hasbro, manufacturer of G.I. Joe, would you
argue to the regulatory authorities that the relevant market is dolls, preschool toys, or
all toys including video games? Why? Would your answer change if you were working
for Hasbro?
If I were working for Mattel and we wanted to take over Hasbro, I cerainly would be worried about any arguments that this would lead to concentration of power in the industry. Hence I would make the definition of industry as wide as possible: all toys including video games. I’d argue that what we are all after is time of the child, so we are competing with video games.
If I were working for Hasbro and wanted to defend from Mattel’s attack, I’d try to make the definition as narrow as possible, so the authorities would stop the take-over. Hence I’d say the relevant market is dolls because children have clear preferences and are not stupid; they know dolls are not video games; they appeal to different types of children.
