Market-Participant Doctrine Law and Legal Definition
Market participant doctrine is a principle that a state does not discriminate against interstate commerce under the commerce clause of the constitution by acting as a buyer or seller in the market, by operating a proprietary enterprise, or by subsidizing private business. This is an exception to the dormant commerce clause principle, which prohibits a state from passing legislation that improperly burdens or discriminates against interstate commerce. If the state participates in the market instead of regulating it, the dormant commerce clause analysis does not apply, and the state activity will generally stand.
The Supreme Court introduced the market participant doctrine in Hughes v. Alexandria Scrap Corp., 426 U.S. 794 (U.S. 1976), which upheld a Maryland program that offered bounties to scrap processors to destroy abandoned automobile hulks. The court held that “ the commerce clause of the Constitution (Art I, 8, cl 3) does not require independent justification for a state's entry into the market as a purchaser, in effect, of a potential article of interstate commerce, although the state restricts its trade to its own citizens or businesses within the state; nothing in the purposes animating the commerce clause forbids a state, in the absence of congressional action, from participating in the market and exercising the right to favor its own citizens over others.”
