Market Definition, Market Power

31 Pages Posted: 13 May 2015  

Louis Kaplow

Harvard Law School; National Bureau of Economic Research (NBER)

Multiple version iconThere are 2 versions of this paper

Date Written: May 2015

Abstract

Market definition and market power are central features of competition law and practice but pose serious challenges. On one hand, market definition suffers decisive logical infirmities that render it infeasible, unnecessary, and counterproductive, and the practice of stating market power requirements as market share threshold tests is incoherent as a matter of empirics and policy. On the other hand, market power is often probative of the desirability of liability, yet the typically assumed functional relationship is unexplored and often implausible. These latter deficiencies are addressed through a ground-up analysis of the channels by which market power can be relevant. It is important to explicitly and simultaneously consider both anti-competitive and pro-competitive explanations for challenged practices and to attend to the magnitudes of the social consequences of correct and mistaken imposition of liability in order to identify the various ways and senses in which market power bears on optimal decision-making.

Keywords: Market power, market definition, competition policy, antitrust, merger guidelines, market share

JEL Classification: D42, K21, L12, L40

Suggested Citation

Kaplow, Louis, Market Definition, Market Power (May 2015). International Journal of Industrial Organization, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2605179

Louis Kaplow (Contact Author)

Harvard Law School ( email )

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Cambridge, MA 02138
United States
617-495-4101 (Phone)
617-496-4880 (Fax)

HOME PAGE: http://www.law.harvard.edu/faculty/directory/facdir.php?id=32&show=bibliography

National Bureau of Economic Research (NBER)

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Cambridge, MA 02138
United States

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