IN applying antitrust laws, courts often must define geographic "markets"; the verdict frequently depends upon the definition selected. Legal market definitions have rarely extended beyond the boundaries of the United States. When the principal laws were enacted and first interpreted, protective laws may have made this limitation appropriate. In 1890 (the year that the Sherman Act was passed), for example, tariff collections equaled approximately 30 percent of the value of imported goods. This suggests that most product markets were effectively closed to foreign producers. Treating the United States economy as "closed" may be less appropriate today. In the year we use for empirical testing below (1972), the comparable tariff figure was 6 percent. Declining transportation costs have further opened American markets. Most experts expect this trend toward interdependence to continue. When considering foreign markets, both legal and economics professions typically use trade volume to measure foreign competition. This orthodoxy has been challenged by Areeda and Turner' and by Landes and Posner,2 who advocate expanding the legal "market" to include not only imports but some or all nonimported foreign production. They argue that substantial imports show that foreign producers are "in the market" and could therefore divert supplies to the American market in response to noncompetitive prices. They suggest that the impact of this potential diversion may be gauged better by the total sales of foreign firms than by the amount they happen to sell in the American market. Ultimately the appropriate measure of foreign competition is a case-bycase question; the answer need not be the same for all industries. Never-