The Logic of Market Definition

49 Pages Posted: 14 Aug 2018 Last revised: 11 Feb 2019

See all articles by David Glasner

David Glasner

Federal Trade Commission

Sean Sullivan

University of Iowa College of Law

Date Written: February 8, 2019

Abstract

Despite all the commentary that the topic has attracted in recent years, confusion still surrounds the proper definition of relevant markets in antitrust. This paper addresses that confusion and attempts to explain the underlying logic of market definition. It does so largely by way of exclusion. The paper identifies and explains three common errors in the way that courts and advocates approach market definition. The first error is what we call the natural market fallacy. This is the mistake of assuming that relevant markets are identifiable constructs and features of competition in the world, rather than the purely conceptual analytic devices that they actually are. The second error is what we call the independent market fallacy. This is the failure to appreciate that relevant markets do not exist independent of any theory of harm but must always be customized to reflect the specific details of a given theory of harm. The third error is what we call the single market fallacy. This is the tendency to seek some single, best relevant market, when in reality there will typically be many relevant markets that could be helpfully and appropriately drawn to aid in the analysis of a given case or investigation. In the course of identifying and debunking these fallacies, the paper clarifies the appropriate framework for understanding and conducting market definition.

Keywords: antitrust, market definition, economics

JEL Classification: L4, L1, N1

Suggested Citation

Glasner, David and Sullivan, Sean, The Logic of Market Definition (February 8, 2019). 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 Sullivan (Contact Author)

University of Iowa College of Law ( email )

Melrose and Byington
Iowa City, IA 52242
United States

HOME PAGE: http://sean-p-sullivan.com

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