Good Riddance to Market Definition?

Abstract

Professor Kaplow contends that the use of market definition and market shares in antitrust analysis is fundamentally flawed and should be abandoned. We challenge that conclusion by showing that it is based on a misperception of the purpose and practice of market definition, an overstatement of the flaws of market definition, and an overstatement of the workability of the direct measurement of market power that Professor Kaplow proposes as a replacement. Ultimately, market definition is a useful, albeit imperfect, tool that requires care to apply properly. In our view, market definition is a valuable part of a full-blown competitive analysis that provides an analytical construct—a multipart test—that helps regulators, judges, juries, and advocates make sense of dynamic conditions, evaluate the forces at play, and reach a reasoned decision.