Market Definition Alchemy
Harvard Law School; National Bureau of Economic Research (NBER)
May 15, 2013
Antitrust Bulliten, Vol. 57, 2012
In a recent series of articles, I argue that the market definition/market share paradigm should be abandoned entirely. Among my central claims are that: (1) as a matter of economic logic, there exists no valid way to infer market power from the market shares in redefined (non-homogeneous-goods) markets — short of entirely reversing the market redefinition; and (2) choosing a best market requires already having in hand one’s best estimate of market power, rendering the exercise pointless — actually worse, since the market power inference from the chosen market is inferior to the estimate with which one began. Not surprisingly, criticisms advanced in this Symposium and elsewhere do not succeed in repealing the laws of logic, any more than medieval alchemists were able to overturn the laws of nature.
Number of Pages in PDF File: 28
Keywords: Market definition, Mergers, Merger guidelines, Hypothetical monopolist test, Competition policy, Antitrust
JEL Classification: D42, K21, L40
Date posted: May 16, 2013
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