Market Definition: An Analytical Overview
Jonathan B. Baker
American University - Washington College of Law
November 1, 2006
Antitrust Law Journal , Vol. 74, 2007
This essay surveys important issues in antitrust market definition. It identifies settings in which market definition is useful, and evaluates methods of defining markets. It considers whether markets should be defined with respect to demand substitution only or whether supply substitution also should count. It addresses practical issues in defining markets, including the probative value of various types of evidence, how much buyer substitution is too much, application of the market definition algorithm of the Horizontal Merger Guidelines, the Cellophane fallacy, and the advantages and disadvantages of defining submarkets. It also evaluates several controversial approaches to market definition, including price correlations, shipment flows, critical loss analysis, and cluster markets.
Number of Pages in PDF File: 45
Keywords: market definition, antitrust
JEL Classification: L4
Date posted: November 26, 2005 ; Last revised: April 30, 2013
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