LAW & ECONOMICS: HARM CAUSED TO THE ECONOMY - ASSESSMENT - PRICE-ELASTICITY OF DEMAND - COMPETITION AUTHORITY

The proper use of price elasticity of demand in the (qualitative) harm assessment caused to the economy

In the last few years, the Autorité de la concurrence often made reference to the price-elasticity of demand when evaluation the harm caused to the economy. However, this concept is not relevant when the relevant products are imperfect substitutes. In this extremely common case, one should rather focus on the degree of substitution (measured for instance through diversion ratios) as one does to assess unilateral effects in merger control.

*This article is an automatic translation of the original article, provided here for your convenience. Read the original article. I. Jurisprudence and practice of the Authority 1. Before the implementation of the sanctions communiqué 1. In its Notice of 16 May 2011 on the method for determining financial penalties (hereinafter the "penalty notice"), the Competition Authority (hereinafter the "Authority") states that "[in]assessing the extent of the damage caused to the economy, the Authority shall take into account, inter alia, the following elements, as appropriate and to the extent available to it ...": (...) the economic characteristics of the activities, sectors or markets concerned (barriers to entry, degree of concentration, price elasticity of demand, margin, etc.)'. (§ 32).

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Thibaud Vergé, The proper use of price elasticity of demand in the (qualitative) harm assessment caused to the economy, September 2015, Concurrences N° 3-2015, Art. N° 73920, pp. 15-22

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