Abstract: The market definition / market share paradigm, under which a relevant market is defined
and pertinent market shares therein examined in order to make inferences about market power,
dominates competition law. This Article advances the immodest claim that the market definition
process is incoherent as a matter of basic economic principles and hence should be abandoned
entirely. This conclusion is based on the inability to make meaningful inferences of market
power in redefined markets; the reliance on an unarticulated notion of a standard reference
market, whose necessity and prior omission signal a serious gap; the impossibility of
determining what market definition is best in a sensible manner without first formulating a best
estimate of market power, rendering further analysis pointless and possibly leading to erroneous
outcomes; and the mistaken focus on cross-elasticities of demand for particular substitutes rather
than on the market elasticity of demand, which error results from the need to define markets.
Although the inquiry is conceptual, brief remarks on legal doctrine suggest that creating
conformity may not be unduly difficult.
Subsequently published in the Harvard Law Review:
http://www.harvardlawreview.org/media/pdf/vol_12402kaplow.pdf