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Louis Kaplow, The Accuracy of Traditional Market Power Analysis and a Direct Adjustment Alternative, 95 Harv. L. Rev. 1817 (1982).

Abstract: Landes and Posner (1981) examined determinants of a firm's demand elasticity and applied economic analysis to market power issues. Market power is influenced by market share, substitutes, output of fringe firms and competitive entry. Courts usually consider these factors intuitively, thus lending support to the concept that market power is not the sole determinant of antitrust liability. Other factors for consideration in antitrust questions are redistribution of income from consumers to dominant firms, firm size, deterrent effect of antitrust actions and the precedent of an antitrust decision. Market power assessments based solely on market share considerations must be adjusted. Landes and Posner suggested market redefinition, but this is a crude tool. Further, use of the market redefinition approach may cause errors by emphasizing substitution possibilities. A better approach would be that of direct adjustment, wherein the inference of market power is directly adjusted downward or upward. Overall, analysis of the market redefinition approach results in different conclusions when considering geographical market definition, substitutes in production, output of fringe firms and consideration of merger cases.