The Logic of Market Definition

45 Pages Posted: 14 Aug 2018  

David Glasner

Federal Trade Commission

Sean Patrick Sullivan

University of Iowa - College of Law

Date Written: July 31, 2018

Abstract

Despite the voluminous commentary that the topic has attracted in recent years, much confusion still surrounds the proper definition of antitrust markets. This paper seeks to clarify market definition, partly by explaining what should not factor into the exercise. Specifically, we identify and describe three common errors in how courts and advocates approach market definition. The first error is what we call the natural market fallacy: the mistake of treating market boundaries as preexisting features of competition, rather than the purely conceptual abstractions of a particular analytical process. The second is the independent market fallacy: the failure to recognize that antitrust markets must always be defined to reflect a theory of harm, and do not exist independent of a theory of harm. The third is the single market fallacy: the tendency of courts and advocates to seek some single, best relevant market, when in reality there will typically be many relevant markets, all of which could be appropriately drawn to aid in competitive effects analysis. In the process of dispelling these common fallacies, this paper offers a clarifying framework for understanding the fundamental logic of market definition.

Keywords: antitrust, market definition, economics

JEL Classification: L4, L1, N1

Suggested Citation

Glasner, David and Sullivan, Sean Patrick, The Logic of Market Definition (July 31, 2018). U Iowa Legal Studies Research Paper No. 2018-14. Available at SSRN: https://ssrn.com/abstract=3223025 or http://dx.doi.org/10.2139/ssrn.3223025

David Glasner

Federal Trade Commission ( email )

601 Pennsylvania Avenue, NW
Washington, DC 20580
United States
202-326-3345 (Phone)

Sean Patrick Sullivan (Contact Author)

University of Iowa - College of Law ( email )

Melrose and Byington
Iowa City, IA 52242
United States

HOME PAGE: http://ssully.com

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