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The Relevant Market: Possible and Productive

Gregory J. Werden, Antitrust Law Journal Online, April 2014

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Professor Louis Kaplow capped off his series on the relevant market with a final essay in this Journal. His premise remains that relevant market is used only to help assess a firm’s market power based on its market share. He claims: (1) “there exists no valid way to make market power inferences from shares” of a multi-product market; (2) “it is impossible to determine which market definition is superior [in inferring market power] without already formulating one’s best estimate of market power”; and (3) delineating the relevant market is “counterproductive in a number of specific [merger] applications.”

Kaplow calls on his critics to demonstrate the relevant market’s utility, and Part I of this essay answers the call. Part II shows that he does not prove his second claim: He mistakenly presumes a single purpose for the relevant market and merely asserts that it is not needed for that purpose. Parts III and IV expose deep flaws in his other claims. Both rest on distorted views of antitrust analysis. The first claim also rests on faulty economics and the third on misapplication of the hypothetical monopolist test (HMT).

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