“Zero‐price markets,” wherein firms set the price of their goods or services at $0, have exploded in quantity and variety. Creative content, software, search functions, social media platforms, mobile applications, travel booking, navigation and mapping systems, and myriad other goods and services are now widely distributed at zero prices. But despite the exponential increase in the volume of zero‐price products being consumed, antitrust institutions and analysts have failed to provide an adequate response to markets without prices.
Modern antitrust law is firmly grounded in neoclassical economics, which is in turn centered on price theory. Steeped in price theory, preeminent antitrust theorists have urged that without prices there can be no markets, and consequently no market power. This heavy methodological dependence on positive prices has led antitrust courts and enforcement agencies to overlook potentially massive welfare harms. Unfortunately, recent empirical research confirms that such harms have already occurred.
These failures to conceive of zero‐price markets as antitrust “markets” indicate how fundamentally zero prices challenge traditional theories and analytical frameworks. This Article establishes a novel taxonomy of customer‐facing costs, distinguishing “market‐signaling” from “non‐market‐signaling” costs. Crucially, it demonstrates that market‐signaling costs are present in many zero‐price contexts. The absence of positive prices thus does not foreclose antitrust scrutiny; “trade,” for purposes of the Sherman and Clayton Acts, encompasses zero‐price transactions. To continue ignoring welfare harms in these markets would be both unjust and inefficient. The Article concludes by identifying antitrust law’s proper role within—and stance toward—zero‐price markets.