Market Definition As a Social Construction (Marktabgrenzung als soziale Konstruktion)
Anti-trust cases more often than not hinge upon market definition. The anti-trust authorities use standardised tests for the purpose, like the "small but significant and nontransitory increase in price" test prevalent in US law. These tests are often read as neoclassical economics, watered down to legal scale. They then are interpreted by economic concepts like cross price elasticities. These interpretations rest on methodological individualism. Social phenomena, like competition, are explained from the perspective of actors maximising their individual utility. If one wants to understand how an individual firm is controlled by competition, this is a most helpful approach. But for defining the effective area of competition, or the relevant market, methodological holism is more powerful. Its basic conceptual unit is not the individual, but communication. Markets are seen as implicitly or explicitly organised entities, giving an industry an identity, and helping the consumers orient themselves in a complex environment. Specifically, a market turns out to be a hybrid between co-operation (for constituting the area of competition) and conflict (within the area thus defined). This alternative approach is important for anti-trust practice. The decisive fact is not whether two products "objectively ought to be" substitutes. What market participants see as substitutes is the only thing that matters. Consequently, for market definition, anti-trust authorities may not (only) rely on their own wisdom. They must find ways to reconstruct the communication among market participants.
|Date of creation:||Nov 2003|
|Date of revision:|
|Publication status:||published in: Andreas Fuchs/Hans-Peter Schwintowski/Daniel Zimmer (Eds.): Festschrift für Ulrich Immenga zum 70. Geburtstag, München 2004, 127-147.|
|Contact details of provider:|| Postal: Kurt-Schumacher-Str. 10 - D- 53113 Bonn|
Phone: +49-(0)228 / 91416-0
Fax: +49-(0)228 / 91416-55
Web page: http://www.coll.mpg.de/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Geroski, Paul A, 1997.
"Thinking Creatively About Markets,"
CEPR Discussion Papers
1694, C.E.P.R. Discussion Papers.
- Patrick Massey, 2000. "Market Definition and Market Power in Competition Analysis - Some Practical Issues," The Economic and Social Review, Economic and Social Studies, vol. 31(4), pages 309-328.
- Ulrich Witt, 2006. "Evolutionary Economics," Papers on Economics and Evolution 2006-05, Philipps University Marburg, Department of Geography.
- Kelvin J. Lancaster, 1966. "A New Approach to Consumer Theory," Journal of Political Economy, University of Chicago Press, vol. 74, pages 132.
- Finnemore, Martha & Sikkink, Kathryn, 1998. "International Norm Dynamics and Political Change," International Organization, Cambridge University Press, vol. 52(04), pages 887-917, September.
- Harless, David W & Camerer, Colin F, 1994. "The Predictive Utility of Generalized Expected Utility Theories," Econometrica, Econometric Society, vol. 62(6), pages 1251-89, November.
- March, James G. & Olsen, Johan P., 1998. "The Institutional Dynamics of International Political Orders," International Organization, Cambridge University Press, vol. 52(04), pages 943-969, September.
- McCloskey, Donald N, 1983. "The Rhetoric of Economics," Journal of Economic Literature, American Economic Association, vol. 21(2), pages 481-517, June.
- Moe, Terry M, 1990. "Political Institutions: The Neglected Side of the Story," Journal of Law, Economics and Organization, Oxford University Press, vol. 6(0), pages 213-53.
- Yee, Albert S., 1996. "The causal effects of ideas on policies," International Organization, Cambridge University Press, vol. 50(01), pages 69-108, December.
When requesting a correction, please mention this item's handle: RePEc:mpg:wpaper:2003_11. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Marc Martin)
If references are entirely missing, you can add them using this form.