Please answer all of the following 3 questions. All questions are equally weighted. Please explain and show your work:
1. Explain the SSNIP (Small but Significant Non-transitory Increase in Prices) test for the determination of the product market. Discuss issues with its implementation in practice. Discuss the definition of market power and the direct and indirect assessment of market power by anti-trust authorities.
2. Rate of return regulation is a frequently used method of regulation. Explain its implementation and the Averch-Johnson effect. Use a graph to show it graphically. Discuss the empirical evidence on the Averch-Johnson effect.
3. Question 3 will be uploaded as an additional file because it includes formula that can be copied into this box.
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