Foreign Competition as a Factor Defining Geographic Bound-aries of Market. Scientific Research of Faculty of Economics

Abstract

As a result of world globalization, competition in the markets for goods and services is also becoming global. Since national market participants are under pressure from foreign competition, when defining geographic boundaries, consideration should be given not only to agreements and actions in the domestic market, but also to the behavior of foreign competitors. This leads either to the expansion of the geographical boundaries, or to the inclusion in the economic analysis of factors external to the relevant market, explaining the state of world stocks / shortages of goods and the price movement. The article provides a comparative analysis of approaches to geographical market defi-nition, taking into account foreign competition (actual and potential). The theory of industrial organ-ization and the new institutional economic theory are used as a methodological basis for the study. The results of the study indicate the need to use a “broad” approach in defining the relevant market, that is, based on the analysis of commodity flows, potential competition and switching costs.