Critical loss analysis is a way to directly implement the hypothetical monopolist test for a product market. The first step of critical loss analysis calculates the “critical loss,” which is the maximum loss in sales that the hypothetical monopolist controlling a candidate market could incur...

This paper generalizes the critical loss concept of Harris and Simons to account for a broader range of possible cost structures. Our focus on understanding the market level equilibrium for relatively homogenous goods makes it clear that the Harris and Simons procedure is appropriate in some...