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Quantitative competition analysis: Stationarity tests in geographic market definition

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Author Info
Willem Boshoff () (Department of Economics, University of Stellenbosch)
Abstract

The paper focuses on the delineation of geographic markets in competition analysis, investigating the use of both quantitative and qualitative evaluation in the market definition exercise. To this end, the first part is devoted to a conceptual framework for market definition (adopted from Haldrup (2003)). Thereafter, a variety of price tests are explored that can be applied within the quantitative part of the framework. Similar to Forni (2004), the paper emphasizes the use of stationarity tests (that is, tests for the existence of unit roots) – illustrating their application to a recent competition investigation in South Africa.

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File URL: http://www.ekon.sun.ac.za/wpapers/2006/wp172006/wp-17-2006.pdf
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File Function: First version, 2006
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Publisher Info
Paper provided by Stellenbosch University, Department of Economics in its series Working Papers with number 17/2006.

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Date of creation: 2006
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Handle: RePEc:sza:wpaper:wpapers31

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Related research
Keywords: Market definition; Delineation; Quantitative; Stationarity tests; Prices; Geographic; SSNIP; Hypothetical monopolist; Competition; Unit root; Price ratio; Antitrust;

Find related papers by JEL classification:
L40 - Industrial Organization - - Antitrust Issues and Policies - - - General
L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
L43 - Industrial Organization - - Antitrust Issues and Policies - - - Legal Monopolies and Regulation or Deregulation
D4 - Microeconomics - - Market Structure and Pricing

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Fok, D. & Franses, Ph.H.B.F. & Paap, R., 2005. "Performance of Seasonal Adjustment Procedures: Simulation and Empirical Results," Econometric Institute Report EI 2005-30 Revision_Date:, Erasmus University Rotterdam, Econometric Institute. [Downloadable!]
  2. Perron, Pierre & Ng, Serena, 1996. "Useful Modifications to Some Unit Root Tests with Dependent Errors and Their Local Asymptotic Properties," Review of Economic Studies, Blackwell Publishing, vol. 63(3), pages 435-63, July. [Downloadable!] (restricted)
    Other versions:
  3. Serena Ng & Pierre Perron, 2001. "LAG Length Selection and the Construction of Unit Root Tests with Good Size and Power," Econometrica, Econometric Society, vol. 69(6), pages 1519-1554, November. [Downloadable!] (restricted)
    Other versions:
  4. Stigler, George J & Sherwin, Robert A, 1985. "The Extent of the Market," Journal of Law & Economics, University of Chicago Press, vol. 28(3), pages 555-85, October.
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  5. Daniel Hosken & Christopher T. Taylor, 2004. "Discussion of "Using Stationarity Tests in Antitrust Market Definition"," American Law and Economics Review, Oxford University Press, vol. 6(2), pages 465-475.
  6. David Genesove, 2004. "Comment on Forni's "Using Stationarity Tests in Antitrust Market Definition"," American Law and Economics Review, Oxford University Press, vol. 6(2), pages 476-478.
  7. Geroski, P. A., 1998. "Thinking creatively about markets," International Journal of Industrial Organization, Elsevier, vol. 16(6), pages 677-695, November. [Downloadable!] (restricted)
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  8. Mario Forni, 2004. "Using Stationarity Tests in Antitrust Market Definition," American Law and Economics Review, Oxford University Press, vol. 6(2), pages 441-464.
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  9. Haldrup, Niels, . "Empirical analysis of price data in the delineation of the relevant geographical market in competition analysis," Economics Working Papers 2003-9, School of Economics and Management, University of Aarhus. [Downloadable!]
  10. Nicola Theron, 2001. "The Economics Of Competition Policy: Merger Analysis In South Africa," South African Journal of Economics, Economic Society of South Africa, vol. 69(4), pages 614-658, December. [Downloadable!] (restricted)
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