3.2 Market Definition, Types and Market Power Analysis

Market definition — the hypothetical monopolist test (SSNIP: a small but significant non- transitory increase in price — if customers would switch away, the market is wider): the product market (substitutability) and the geographic market (where customers could turn). Types: | Market type | Structure | Competition law's concern | |---|---|---| | Perfect competition | Many, identical | None (the benchmark) | | Monopolistic competition | Many, differentiated | Advertising/brand issues | | Oligopoly | Few interdependent | Coordination risk (parallel behaviour) | | Duopoly | Two | Merger watch | | Monopoly / monopsony | One seller / one buyer | Abuse of dominance/power |Market power — the ability profitably to raise price above cost or restrict output; measured by share (within the defined market), entry barriers (regulatory, scale, network), and consumer- switching frictions. Share is the starting point, not the verdict: 60% with free entry may be weaker than 40% behind a licence wall.