Defining a cluster market: The case of the Korean Internet portal service market

Abstract

In a cluster market, many related and unrelated products or services are sold. Examples of players in cluster markets are Tesco, Sears, Carrefour, Walmart, JCPenny, and Meijer. Because of some unique characteristics of cluster markets, studies of cluster market definition have been very scant. This paper reviews the market definition issues of cluster markets, proposes a statistical market definition method for cluster markets, and applies the method to the Korean Internet portal service market. The method uses all available information on cluster markets without oversimplifying market data. The results of analyses show that the Korean Internet portals can be seen as one market even though the third ranked player in the Korean Internet portal service market, Nate, is more akin to a specialty service provider, not a player competing in the cluster market squarely with Naver and Daum.