Streetwise Professor

April 26, 2007

Market Definition Follies

Filed under: Derivatives,Exchanges — The Professor @ 9:48 am

Holman Jenkins wrote a blistering article (subscription required) on the all-too-typical inanities of market definition in anti-trust. He didn’t mention CME-CBT, but as I wrote on the day the merger was announced, market definition will be the key issue. I know with near metaphysical certainty which market definition is the wrong one–the one that is most often cited by opponents of the deal, namely “US futures.” One can only hope that Jenkins’s cynical view of the antitrust authorities (namely, that they rig the definition of markets in order to permit them to file cases so as to justify their existence) isn’t confirmed by the Justice Department in the exchange merger case. There is virtually no economic rationale for the US futures definition, but it is the only one under which it is possible to challenge the merger. If Justice uses that definition, it will go a long way to validating Jenkins’s cynicism.

Print Friendly, PDF & Email

No Comments »

No comments yet.

RSS feed for comments on this post. TrackBack URI

Leave a comment

Powered by WordPress