Legal Definitions - Market Participant Exception

The market participant exception is a rule that says a state can participate in the market without being subject to the same rules as other market players. This exception applies when the state is not acting as a regulator, but rather as a participant in the market.

For example, if a state produces goods for sale in the market, it can give preference to its own products over those produced by other states. This is because the state is acting as a market participant, not a regulator. Similarly, if a state offers subsidies or other incentives to businesses within its borders, it can do so without violating the Commerce Clause.

Another example of the market participant exception is when a state operates a toll road. The state can charge higher tolls for out-of-state drivers than for in-state drivers, because it is acting as a market participant, not a regulator.

The market participant exception allows states to promote their own economic interests without running afoul of the Commerce Clause. However, it is important to note that the exception only applies when the state is truly acting as a market participant, not a regulator.