market definition

Primary tabs

In antitrust law, market definition is what determines the economic sphere in which anti-competitive conduct is measured.

Some courts have determined market definition based only on marginal consumers, to the neglect of core consumers, see FTC v. Whole Foods Mkt., 548 F.3d 1028, 1033 (D.C. Cir. 2008). In economic terms, marginal consumers are demand-elastic, while core consumers are demand-inelastic. In the example provided by the Whole Foods case, marginal consumers are only weakly committed to premium organics and will substitute conventional produce in response to price increases. Core consumers, on the other hand, are strictly committed to organic foods and will shop at Whole Foods if it is the only premium, organic option, regardless of post-merger price increases. In that case, the D.C. Court of Appeals held that core consumers should be included in a market-definition analysis.

[Last updated in July of 2023 by the Wex Definitions Team]