Lightening Up Market Definition

RESEARCH HANDBOOK ON THE ECONOMICS OF ANTITRUST LAW, Einer Elhauge, ed., New York: Edward Elgar, 2010

37 Pages Posted: 4 May 2010  

David S. Evans

Global Economics Group; University College London

Date Written: May 1, 2010

Abstract

This article proposes a resolution to the longstanding controversy between courts, economists, and antitrust authorities over the appropriate role of market delineation. Market definition should remain the first step in antitrust and merger analysis. It provides information on competitive constraints and other aspects of the economic landscape that are essential for understanding whether the practice at issue could harm consumers. However, there is no basis in economics for, as a general matter, drawing hard market boundaries and making strong inferences about market power from shares calculated based on those boundaries. The courts should abandon these practices, which are not required by the antitrust statutes, as they have done with other antitrust jurisprudence, such as maximum price fixing, that has been shown to be inconsistent with economics. They can write coherent analyses of antitrust issues without relying on hard market boundaries. The antitrust authorities should examine the competitive effects of business practices such as mergers only after a market inquiry that focuses on understanding the competitive landscape and the potential competitive constraints on business practices; but that inquiry does not need to settle on a hard boundary.

Suggested Citation

Evans, David S., Lightening Up Market Definition (May 1, 2010). RESEARCH HANDBOOK ON THE ECONOMICS OF ANTITRUST LAW, Einer Elhauge, ed., New York: Edward Elgar, 2010. Available at SSRN: https://ssrn.com/abstract=1599270

David S. Evans (Contact Author)

Global Economics Group ( email )

111 Devonshire St.
Suite 900
Boston, MA 02108
United States

University College London ( email )

Gower St
London WC1E OEG, WC1E 6BT
United Kingdom

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