TESTING THE BOUNDARIES OF THE RELEVANT MARKET IN THE COMPETITION POLICY

Milan Kostic

Faculty of Economics, University of Kragujevac, Kragujevac, Serbia

The concept of the relevant market is very important for the competition policy. The assessment of the market power of the economic entities operating on a relevant market depends on the market size. The relevant market has two dimensions – the production and the geographic ones – hence, there are a relevant product market and a relevant geographic market. The purpose of the paper is to show the possible ways of determining the relevant market boundaries, in an explicit and systematic way, by applying appropriate tests, and on the example of the specific Serbian market. In the paper, two important tests to determine the boundaries of the market have been applied: the Price Correlation Test and the Goods Physical Movement Test (the Elzinga-Hogarty test). The tests are very useful in situations where researchers only possess secondary data and want to determine the boundaries of the market based on them. The disadvantages of the tests, which of course exist, do not diminish their importance; therefore, they are very useful and recommended for determining the scope of the market.

Keywords: relevant market, competition policy, Price Correlation Test, Elzinga-Hogarty test

JEL Classification: D47, L40, K21