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Market definition, market power

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  • Kaplow, Louis
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.

Suggested Citation

  • Kaplow, Louis, 2015. "Market definition, market power," International Journal of Industrial Organization, Elsevier, vol. 43(C), pages 148-161.
    • Handle: RePEc:eee:indorg:v:43:y:2015:i:c:p:148-161
    DOI: 10.1016/j.ijindorg.2015.05.001
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    References listed on IDEAS

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    2. Budzinski, Oliver & Gänßle, Sophia & Stöhr, Annika, 2020. "The draft for the 10th amendment of German competition law: Towards a new concept of "Outstanding relevance across markets"?," Ilmenau Economics Discussion Papers 142, Ilmenau University of Technology, Institute of Economics.
    3. Oliver Budzinski & Annika Stöhr, 2019. "Competition policy reform in Europe and Germany – institutional change in the light of digitization," European Competition Journal, Taylor & Francis Journals, vol. 15(1), pages 15-54, January.
    4. Mehdi Abbas & Catherine Locatelli, 2019. "Interdependence as a lever for national hybridization: The EU-Russia gas trade [L’hybridation des systèmes institutionnels nationaux dans l’interdépendance. Les échanges gaziers UE-Russie]," Post-Print hal-02472141, HAL.
    5. Budzinski, Oliver & Lindstädt-Dreusicke, Nadine, 2018. "The new media economics of video-on-demand markets: Lessons for competition policy," Ilmenau Economics Discussion Papers 116, Ilmenau University of Technology, Institute of Economics.
    6. Locatelli, C., 2018. "La confrontation des systèmes institutionnels nationaux dans l'interdépendance : les échanges gaziers UE-Russie," Working Papers 2018-03, Grenoble Applied Economics Laboratory (GAEL).
    7. V. Bageri & Y. Katsoulacos, 2017. "The market power requirement in antitrust enforcement and its usefulness," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 44(2), pages 145-159, June.
    8. Mehdi Abbas & Catherine Locatelli, 2020. "National institutional systems’ hybridisation through interdependence. The case of EU-Russia gas relations," Post-Print hal-02272171, HAL.
    9. Hildebrandt, Christian & Arnold, René, 2018. "Marktbeobachtung in der digitalen Wirtschaft – Ein Modell zur Analyse von Online-Plattformen," WIK Discussion Papers 427, WIK Wissenschaftliches Institut für Infrastruktur und Kommunikationsdienste GmbH.
    10. Krämer, Jan & Wohlfarth, Michael, 2018. "Market power, regulatory convergence, and the role of data in digital markets," Telecommunications Policy, Elsevier, vol. 42(2), pages 154-171.
    11. Budzinski, Oliver & Polk, Andreas, 2021. "Die 10. GWB-Novelle: Neue Wettbewerbsregeln für die Digitalökonomie," Ilmenau Economics Discussion Papers 155, Ilmenau University of Technology, Institute of Economics.
    12. Catherine Locatelli, 2018. "La confrontation des systèmes institutionnels nationaux dans l'interdépendance : les échanges gaziers UE-Russie," Working Papers hal-01715932, HAL.
    13. Budzinski, Oliver & Lindstädt-Dreusicke, Nadine, 2019. "The new media economics of video-on-demand markets: Lessons for competition policy (updated version)," Ilmenau Economics Discussion Papers 125, Ilmenau University of Technology, Institute of Economics.
    14. Akihiro NAKAMURA & Takanori IDA, 2021. "Delineating zero-price markets with network effects:An analysis of free messenger services," Discussion papers e-21-002, Graduate School of Economics , Kyoto University.
    15. Bertschek, Irene & Briglauer, Wolfgang & Hüschelrath, Kai & Krämer, Jan & Frübing, Stefan & Kesler, Reinhold & Saam, Marianne, 2016. "Metastudie zum Fachdialog Ordnungsrahmen für die Digitale Wirtschaft: Im Auftrag des Bundesministeriums für Wirtschaft und Energie (BMWi)," ZEW Expertises, ZEW - Leibniz Centre for European Economic Research, number 147040.
    16. Avdasheva, Svetlana & Golovanova, Svetlana & Katsoulacos, Yannis, 2019. "The role of judicial review in developing evidentiary standards: The example of market analysis in Russian competition law enforcement," International Review of Law and Economics, Elsevier, vol. 58(C), pages 101-114.
    17. Georgios Nalbantis & Tim Pawlowski & Dominik Schreyer, 2023. "Substitution Effects and the Transnational Demand for European Soccer Telecasts," Journal of Sports Economics, , vol. 24(4), pages 407-442, May.

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    More about this item

    Keywords

    Market power; Market definition; Competition policy; Antitrust; Merger guidelines; Market share;
    All these keywords.

    JEL classification:

    • D42 - Microeconomics - - Market Structure, Pricing, and Design - - - Monopoly
    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General

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