Jose Javier Jurado Filippi
ID: 102305020
Business Administration Department
Civil Law

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Mid-term Report Two-sided Market

Index

1. Summary of the articles. I. First Document (Market definition: An analytical overview.) II. Second Document (Two-sided market.)

1. Articles’ Summary I. Market Definition: An Analytical Overview (Jonathan B. Baker) When we want to evaluate markets power, the most important thing to consider is the market definition to determine whether the business conduct will have an anticompetitive effect. On the market definition document we can have a better perspective of how the process of market definition should be conducted, of course including the practical difficulties it may arise from doing so. In addition, it explains why the markets should be defined based solely with references to demand substitution, leaving supply substitution considerations for other steps of competitive effects analysis, and identifies the five types of evidence as to buyer substitution. It also discusses the appropriate scope of markets and will explain why price correlation, shipment flows, critical loss and cluster markets should be avoided. Why define markets? In the document based on the antitrust analysis they define the market as “a collection of products and geographic locations, delineated as part of an inquiry aimed at making inferences about market powers and competitive effect”. Although the markets are described just by naming the companies that participate in them, they are defined by their products they offer and the locations, and not by their participants as we mentioned before. The information provided by the products and locations is helpful to compute statistics regarding the size distribution of the firms, usually in the form of market shares, so some inferences can be made about the market power and likely the anticompetitive effect may be made. Market definition may not be required when the market power or anticompetitive effects can be demonstrated directly through means other than inference from numbers, size distribution and other characteristics of the firm. Market definition may also may not be very useful when the market concentration bears little relation to the economic theory by which competition would allegedly be harmed. The evidence of the anticompetitive effect or market power can be available when the market definition is difficult. Conceptual approaches to market definition U.S. courts emphasized that the markets should be defined respected to the demand substitution. The Supreme Court in du Pont stated that “market is composed of products that have reasonable interchangeability for the purpose for which they are produced-price, use and qualities considered.”