The problem of the geographic market delineation: the revival of the Elzinga-Hogarty test

Abstract

The article concerns the problem of the geographic market delineation. Market definition is subject to a serious criticism, especially in the case of differentiated products, however, it remains an important element of economic analysis in the Russian antitrust law enforcement. The hypothetical monopolist test is the main approach to the market definition, because it captures well the idea behind the market definition. However, the data required for implementing the hypothetical monopolist test in a way that would give reliable results, is not always available. In this situation alternative approaches to the market definition might be used. This article analyses the Elzinga-Hogarty test, which in combination with a list of price tests might become a useful tool of economic analysis. Its main advantage is that it does not require a lot of data, and its results do not become completely corrupt in the case when some data is missing. The main take away of this article is that in the situation when resources available for an antitrust investigation are limited, and data, which is required to implement the hypothetical monopolist test of necessary quality, is not available, the Elzinga-Hogarty test might become an alternative to the hypothetical monopolist test and be used to define geographic markets. The logic of the test, its limitations and additional evidence, which should be used to make the conclusions reliable, are discussed in this article.