Antitrust & Competition Policy Blog

Editor: D. Daniel Sokol
University of Florida
Levin College of Law

A Member of the Law Professor Blogs Network

Wednesday, May 14, 2008

A Practical Guide to the Hypothetical Monopolist Test for Market Definition

Posted by D. Daniel Sokol

Malcolm Coate and Jeffrey Fischer, both of the Federal Trade Commission, provide A Practical Guide to the Hypothetical Monopolist Test for Market Definition.

ABSTRACT: The hypothetical monopolist test has been used to define antitrust markets for over 20 years. However, many of these applications occur within the enforcement agencies and thus the implementation process is not fully transparent to antitrust practitioners. This paper provides a study of 116 market definition decisions from the Federal Trade Commission's archives. We find that the agency rarely has trouble defining both product and geographic markets; in fact, the demand-side market definition process is relatively simple in over half of the cases reviewed. In many of the remaining matters, critical loss, analysis of natural experiments, and various studies of data patterns are undertaken to identify the relevant market. These studies show a remarkable variety in data requirements, sophistication, and analytical technique. Supply-side considerations affect a few markets and price discrimination supports more focused analysis in about 10 cases.

http://lawprofessors.typepad.com/antitrustprof_blog/2008/05/a-practical-gui.html

| Permalink

TrackBack URL for this entry:

http://www.typepad.com/services/trackback/6a00d8341bfae553ef00e5521ac8f18833

Listed below are links to weblogs that reference A Practical Guide to the Hypothetical Monopolist Test for Market Definition:

Comments

Post a comment