The dynamics of market boundaries and the role of systemic market power

Annika Stöhr and Oliver Budzinski

No 198, Ilmenau Economics Discussion Papers from Ilmenau University of Technology, Institute of Economics

Abstract: Identifying the boundaries of a market belongs to the important practices in most areas of antitrust and competition policy. While they are established practices for market definition and delineation, dynamic processes of competition and the new phenomenon of (digital) ecosystems of markets provide new challenges: market boundaries become (i) inherently dynamic and subject to evolutionary change, as well as (ii) subject to the deliberate design of powerful companies. Therefore, the prediction of post-event effects - e.g., competitive effects of a merger or such of an abuse of market power - may fail if they rely on a static or stationary market definition. If market boundaries change inherently through dynamic market competition, identifying these boundaries and their evolution becomes an integral part of a dynamic approach to competition policy - and not just preparatory work. Furthermore, if companies enjoying systemic market power in ecosystems (like e.g., cross-market power) and, thus, the power to shape market boundaries and deliberately change (previous) market delineations, then the identification of market boundaries cannot be viewed independent of the exploitation of market power. Both dynamics of market boundaries require a strongly different approach to market definition than the one of the Commission's 2024 Market Definition Note.

Keywords: dynamic market boundaries; market definition; market delineation; antitrust; competition policy; industrial economics; dynamic competition; digital ecosystems; merger control; systemic market power; cross-market power (search for similar items in EconPapers)
JEL-codes: D40 K21 L10 L40 L86 (search for similar items in EconPapers)
Date: 2025
New Economics Papers: this item is included in nep-com, nep-law and nep-reg
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