What Antitrust Practitioners Should Know About Elasticities But Many of Them Don't

Since a long time price elasticities of demand form part of the standard toolkit of competition analysis. It is an economic concept measuring the responsiveness of the demand for different goods and services to changes in their prices and is widely used in market definition exercises and horizontal merger control. However, although most antitrust practitioners believe to be familiar with the concept, there are some fundamental characteristics of elasticities stemming from the theory of consumer behavior, which are virtually absent from the antitrust literature and many practitioners are hardly aware of. The purpose of this article is to draw the attention to these properties and to underscore their importance for competition analysis