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Journal of Competition Law and Economics Advance Access published online on May 16, 2008
Journal of Competition Law and Economics, doi:10.1093/joclec/nhn015
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© The Author (2008). Published by Oxford University Press. All rights reserved. For Permissions, please email: journals.permissions@oxfordjournals.org

MARKET DEFINITION AND UNILATERAL COMPETITIVE EFFECTS IN ONLINE RETAIL MARKETS

Michael R. Baye *

JEL: K21, L81

Although the basic principles used to define a relevant market or to analyze unilateral competitive effects in traditional retail settings also apply in online retail markets, several features of the online environment add complexities to the analysis. This paper examines some of the results in the economics and marketing literatures that can influence market definition and competitive effects analysis in online retail settings. I argue that a failure to account properly for certain aspects of online markets can lead to erroneous definitions of the relevant market and, more importantly, erroneous conclusions regarding the unilateral competitive effects of horizontal mergers.

* Director, Bureau of Economics, Federal Trade Commission; Bert Elwert Professor of Business, Kelley School of Business, Indiana University. E-mail: mbaye{at}ftc.gov. I thank Liz Callison, Chris Metcalf, and Dan O'Brien for very helpful comments and discussions. The views expressed in this paper are those of the author and do not necessarily reflect those of the Federal Trade Commission or any of the individual Commissioners.


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