Thinking Creatively About Markets

Market definitions are an abstraction: they are useful only to the extent that they help us to organize the way we think about certain types of economic activity. This paper critically examines three different methods of identifying market boundaries, stressing the link between substantive content and the needs of the user of the definition. Most traditional definitions have focused on identifying trading markets (defined by the ‘law of one price’) or anti-trust markets (identified by reference to the ability of a group of firms to artificially elevate prices). A third market concept – that of the strategic market – focuses more directly on the needs of corporate users.