The Impact of Economic Analysis on Market Definition in the Context of Digital Platforms

While advances in economic theory, econometrics and data availability have helped antitrust authorities to fine-tune their approach to market definition in traditional brick and mortar markets, new economic insights have upended the applicability of the very same market definition tools in (digital) platform markets. We briefly discuss five complications laid bare by developments in the economics of digital platform markets: zero-price markets, personalized pricing, the single versus multi market approach to market definition, single-homing versus multi-homing, and non-generic complementarities in digital platform ecosystems.  Notwithstanding these issues, established market definition tools can still serve as conceptual blueprints for market definition in the context of digital platforms.

By Nestor Duch-Brown & Wouter Vergote^[1]

I. INTRODUCTION

Some 40 odd years ago, George Stigler wrote:

My lament is that this battle on market definitions, which is fought thousands of times what with all the private antitrust suits, has received virtually no attention from us economists. Except for a casual flirtation with cross-elasticities of demand and supply, the determination of markets has remained an undeveloped area of economic research at either the theoretical or empirical level.^[2]

It is fair to say that economists certainly took heed of Stigler´s cry for developing economic tools to help defining relevant markets. Theoretical advances in price theory and indu