Price Tests to Define Markets: An Application to Wholesale Gasoline in Canda

The concept of relevant markets is fundamental to antitrust analysis, particularly to those relating to mergers. However, defining relevant markets is sometimes difficult ot operationalize. This has triggered a substantial literature in which price tests have been used to define both economic and antitrust markets. This paper reviews some price tests and applies them in order to define relevant geographic markets in wholesale gasoline in Canada. We find that relevant geographic markets can be larger than cities but smaller than East and West Canada.JEL classification: L490, L810The views expressed here are solely thoseof the authors and are not purpoted to be those of the Commissioner of Competition, the Competition Bureau, or Finance Canada.