Market Definition, Market Power

Louis Kaplow

No 21167, NBER Working Papers from National Bureau of Economic Research, Inc

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 anticompetitive and procompetitive 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.

JEL-codes: D42 K21 L12 L40 (search for similar items in EconPapers)
Date: 2015-05
New Economics Papers: this item is included in nep-com, nep-ind and nep-law
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Citations: View citations in EconPapers (19)

Published as Louis Kaplow, 2015. "Market definition, market power," International Journal of Industrial Organization, vol 43, pages 148-161.

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