A Presentation on Market Definition

Richard Schmalensee, Jun 01, 2011

Let me now turn to the broad consensus on market definition among leading authorities. I don’t have time-and I doubt you have the patience-to go through all the methods and information sources discussed in our paper. It seems more useful on this occasion to highlight three of the key concepts we discuss: the purpose of market definition, the dimensions of market definition, and a useful conceptual tool for market definition.

It is perhaps most important to understand the purpose of market definition. Market definition is not an end in itself; it is a tool that can be useful in assessing the competitive constraints on an existing firm or on a new firm that a merger would produce. To look at the matter from the other side, market definition is the first step in the assessment of market power.

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