Critical Loss: Implementing the Hypothetical Monopolist Test

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Malcolm Coate, Jeffrey Fischer, Apr 01, 2008

This comment responds to two recent papers on critical loss in this magazine. The first, by Gregory J. Werden, cautions against the standard application of CL analysis. The second, by Kevin Murphy and Robert Topel, concludes the CL concept is “so fundamentally flawed that it cannot be used as a tool of market definition.” In this paper, we show that Werden overstates his cas