Monday, June 23, 2014
Greg Werden (DOJ) explains The Relevent Market: Possible and Productive.
ABSTRACT: Professor Louis Kaplow capped off his series on the relevant market with a final essay in this the Antitrust Law 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.” This essay demonstrates the relevant market’s utility. It also shows that: (1) Kaplow’s first claim rests on a distorted view of antitrust analysis and faulty economics; (2) Kaplow does not prove his second claim, but rather just that the relevant market is not needed for the purpose he allows for it; and (3) Kaplow’s third claim rests on a misapplication of the hypothetical monopolist test, faulty economics, and erroneous facts.