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Using Stationarity Tests in Antitrust Market Definition

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  • Mario Forni

Abstract

In this article 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 Augmented Dickey-Fuller 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 strictly related to cointegration analysis but is simpler and has more general validity. An application to the Italian milk market illustrates the technique. Copyright 2004, Oxford University Press.

Suggested Citation

  • Mario Forni, 2004. "Using Stationarity Tests in Antitrust Market Definition," American Law and Economics Review, American Law and Economics Association, vol. 6(2), pages 441-464.
    • Handle: RePEc:oup:amlawe:v:6:y:2004:i:2:p:441-464
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    References listed on IDEAS

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    More about this item

    JEL classification:

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

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