Recapture, Pass-Through, and Market Definition
University of California, Berkeley - Department of Economics
University of California, Berkeley - Haas School of Business
Antitrust Law Journal, Vol. 76, No. 3, pp. 585-604, 2010
We describe how the hypothetical monopolist test used to define relevant markets in horizontal merger cases can be implemented using the fundamental economic concepts of opportunity cost and pass-through. Unlike critical loss analysis, our approach analyzes the behavior of a profit-maximizing hypothetical monopolist, as called for in the 1992 Horizontal Merger Guidelines. This approach also can provide a consistency check between relevant markets defined using the hypothetical monopolist test and claims regarding the pass-through of merger-specific efficiencies.
Number of Pages in PDF File: 20
Date posted: May 16, 2010