Defining the relevant market:
Relevant Product Markets
Doctrine of relative equivalencies:
If consumers will turn to a competing product when faced with a hypothetical small (5%) price
increase, that product is in the relevant product market.
Cross-elasticity of demand: if customers have historically changed products when faced with price
movement, or if prices of different products move together, they are within a single product market.
, 171 (1956).
Current prices may not be competitive prices – where the current price is a natural monopoly
price (due to patent, etc.) the existing price may already be as high as possible to retain market
If current prices are not competitive, a 5% increase may force a switch to a product
outside the relevant market.
(E.g., at some point, all airline prices rise to the point that a
significant number of people will drive or take the train.)
This may also be cross-elasticity of pricing strategy.
, handout (D. DC 1996).
Similar products or different products from the same supplier may have entirely different demand;
hyped first-run movies versus ordinary release or second-run, championship boxing versus ordinary
Int’l Boxing Club
, 189 (1959);
, 190 (9
Product markets are customer-driven not producer-driven:
A market may be a use for a product, not a particular type of product.
Although a majority of
customers may move back and forth, a subset may be captive to a particular product.
manufacturers are captive to cellophane, while candy manufacturers may switch to different
Customer may demand certain services be packaged together.
, 195 (1966);
, 880 (1963).
In these circumstances, lack of other integrated participants will cause problems
for the defendant, because, although they compete to provide each individual service, they are the
sole source for the package.
Customers may treat specific types of sources as a relevant market; where similar or identical
products are available from different types of vendors, and both the customers and the vendors
consider the types different “markets,” the court will follow suit.
The market may be for wholesale customers rather than for the ultimate retail customers.
Relevant Geographic Markets
the suppliers to whom customers will or can travel in order to obtain a
different product in response to a 5% increase.
, 195 (1966).
the suppliers who will be able to move (profitably) into the defendant’s territory in
response to a 5% increase.
C. Market Power: