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Using Spatial Covariance Function for Antitrust Market Delineation

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  • Lucinda, Claudio R.
  • Filho, Arthur Barrionuevo

Abstract

In this paper, an estimation of a Spatial Covariance Function was proposed for determining the relevant geographic market for a merger. This methodology was applied to a proposed merger between two competing Brazilian supermarket chains. During this application, the shortcomings of the analysis carried out by the Brazilian Antitrust System were initially pointed out, including the geographic dimension of the relevant market, which was found to be separated in each municipality located on the shore of Sao Paulo state. The results, based on the estimated spatial covariance function using price data on 22 products in 43 supermarkets, indicate a single geographic market for all municipalities

Suggested Citation

  • Lucinda, Claudio R. & Filho, Arthur Barrionuevo, 2009. "Using Spatial Covariance Function for Antitrust Market Delineation," Brazilian Review of Econometrics, Sociedade Brasileira de Econometria - SBE, vol. 29(1), May.
    • Handle: RePEc:sbe:breart:v:29:y:2009:i:1:a:2698
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    References listed on IDEAS

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    1. Stigler, George J & Sherwin, Robert A, 1985. "The Extent of the Market," Journal of Law and Economics, University of Chicago Press, vol. 28(3), pages 555-585, October.
      • Stigler, George J. & Sherwin, Robert A., 1983. "The Extent of the Market," Working Papers 31, The University of Chicago Booth School of Business, George J. Stigler Center for the Study of the Economy and the State.
    2. Froeb, L.M. & Werden, G.J., 1991. "Correlation, Causality, and all that Jazz: The Inherent Shortcomings of Price Tests for Antitrust Market Delineation," Papers 91-6, U.S. Department of Justice - Antitrust Division.
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    Cited by:

    1. Sánchez Navarro, Dennis, 2012. "Una propuesta metodológica para la definición de mercados geográficos relevantes [A proposed methodology for defining relevant geographic markets]," MPRA Paper 44498, University Library of Munich, Germany.

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