Question

Why can it be difficult to decide what a “market” is for purposes of measuring competition?

Short answer

The market definition could be difficult because most commodities are proven to meet a variety of demands.

Step-by-step solution

Definition

A market is a mechanism for bringing buyers and sellers together through the exchange of goods and services, either directly or through intermediary organizations or agents.

Explanation

It is a widely held belief that in competitive markets across industries, a broad measure of market concentration is comparable to a narrower market. Most commodities are proven to meet a variety of demands, the market definition may be tricky. A large market, on the other hand, tends to make concentration appear lesser, whilst a restricted market tends to make concentration appear higher.

As a result, deciding on a market definition for the sake of gauging competitiveness is problematic. Microsoft's share of the total market for all computer services and software, which includes everything from scientific programs to games, was only $14\%$in $2014$.