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Using Stationarity Tests in Antitrust Market Definition

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  • Forni, Mario

Abstract

In this Paper it is argued that, if two products or geographic areas belong in the same market, their relative price must be stationary. Hence stationarity tests like the ADF and the KPSS can be helpful in delineating the relevant market for Antitrust purposes, particularly for abuses of dominant positions and agreements between competitors. The proposed procedure is closely related with cointegration analysis but has more general validity. An application to the Italian milk market illustrates the technique.

Suggested Citation

  • Forni, Mario, 2002. "Using Stationarity Tests in Antitrust Market Definition," CEPR Discussion Papers 3236, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:3236
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    References listed on IDEAS

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    More about this item

    Keywords

    Anti-trust market definition; Merger guidelines; Stationarity; Dickey-fuller test; Kpss test;
    All these keywords.

    JEL classification:

    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices

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