Defining What the Relevant Market Is: A New Method for Consumer Research and Antitrust

Abstract

Market delineation is an important topic of Antitrust, yet it relies on imperfect methods like the SSNIP test. We propose a novel survey-based approach that is cheap and straightforward to implement, and universally applicable across all product categories. This method is particularly suitable for digital goods priced at zero, where traditional market delineation techniques, such as the SSNIP test, fail. We have validated our method using an online survey, which also yields new insights for the delineation of markets that have been in the recent focus of Antitrust authorities. Our method is also valuable for marketing purposes as it offers a new way to study consumers' consumption patterns.

Keywords: Antitrust, Relevant Market, Correlation Preferences

JEL Classification: K21, L41, C80