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Empirical analysis of price data in the delineation of the relevant geographical market in competition analysis

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  • Haldrup, Niels

    () (Department of Economics Aarhus, Denmark)

Abstract

This paper reviews a number of modern as well as classical econometric techniques suitable for empirically determining whether commodities in physically separated markets belong to the same geographical market. Even though the tools presented generalize to the delineation of the relevant product market our main focus is on the geographical delineation of markets. The analyses rely entirely on the use of price data of different types in an attempt to operationalize the so-called SSNIP methodology for price comparisons. In particular, the stationarity versus non-stationarity of price data appears important because otherwise spurious results can potentially occur. Both bivariate and multivariate price comparisons will be discussed. We also consider situations with data observations covering a relatively long period and where it is likely that structural changes have occurred in the sample period whereby the degree of market integration is likely to have changed. New techniques to deal with such recursive features will be suggested. For the methods presented a discussion of the practical problems and concerns facing the model builder are addressed.

Suggested Citation

  • Haldrup, Niels, "undated". "Empirical analysis of price data in the delineation of the relevant geographical market in competition analysis," Economics Working Papers 2003-9, Department of Economics and Business Economics, Aarhus University.
  • Handle: RePEc:aah:aarhec:2003-9
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    File URL: ftp://ftp.econ.au.dk/afn/wp/03/wp03_09.pdf
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    References listed on IDEAS

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    1. Tom Engsted & Niels Haldrup & Boriss Siliverstovs, 2004. "Long-run forecasting in multicointegrated systems," Journal of Forecasting, John Wiley & Sons, Ltd., vol. 23(5), pages 315-335.
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    8. Dell'Anno, Roberto, "undated". "Estimating the Shadow Economy in Italy: a Structural Equation Approach," Economics Working Papers 2003-7, Department of Economics and Business Economics, Aarhus University.
    9. Nyblom, Jukka & Harvey, Andrew, 2000. "Tests Of Common Stochastic Trends," Econometric Theory, Cambridge University Press, vol. 16(02), pages 176-199, April.
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    12. Granger, Clive W J & Haldrup, Niels, 1997. "Separation in Cointegrated Systems and Persistent-Transitory Decompositions," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 59(4), pages 449-463, November.
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    Citations

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    Cited by:

    1. Scalco, Paulo R. & Braga, Marcelo J., 2015. "Identification of Market Power in Bilateral Oligopoly: The Brazilian Wholesale Market of UHT Milk," 2015 Conference, August 9-14, 2015, Milan, Italy 212278, International Association of Agricultural Economists.
    2. Sanogo, Issa, 2008. "SPATIAL integration of the rice market: emprirical evidence from mid-west and far-west Nepal and the Nepalese-Indian border," MPRA Paper 14488, University Library of Munich, Germany.
    3. Fiuza, Eduardo P.S. & Tito, Fabiana F.M., 2010. "Post-merger time series analysis: Iron ore mining," Resources Policy, Elsevier, vol. 35(3), pages 141-155, September.
    4. Zipitria, Leandro, 2010. "New Directions in Price Test for Market Definition," MPRA Paper 58046, University Library of Munich, Germany.
    5. Willem h. Boshoff, 2007. "Stationarity Tests In Geographic Markets: An Application To South African Milk Markets," South African Journal of Economics, Economic Society of South Africa, vol. 75(1), pages 52-65, March.
    6. Åberg, M. & Fälting, L. & Forssell, A., 2016. "Is Swedish district heating operating on an integrated market? – Differences in pricing, price convergence, and marketing strategy between public and private district heating companies," Energy Policy, Elsevier, vol. 90(C), pages 222-232.
    7. Sanogo, Issa, 2006. "Spatial Integration of the Rice Market: Empirical Evidence from Mid-west and Far-west Nepal, and the Nepalese-Indian Border," Asian Journal of Agriculture and Development, Southeast Asian Regional Center for Graduate Study and Research in Agriculture (SEARCA), vol. 0(Number 1-), pages 1-18, December.
    8. Eduardo P. S. Fiuza & Fabiana F.M. Tito, 2007. "Time Series Econometrics in a Post-Acquisition Antitrust Analysis: The Brazilian Iron Ore Market," Discussion Papers 1306, Instituto de Pesquisa Econômica Aplicada - IPEA.
    9. Cuiabano, Simone & Nicolini de Moraes, João Carlos & Pinha, Lucas, 2017. "Application of time series techniques in relevant market delimitation," TSE Working Papers 17-801, Toulouse School of Economics (TSE).
    10. Willem Boshoff, 2006. "Quantitative competition analysis: Stationarity tests in geographic market definition," Working Papers 17/2006, Stellenbosch University, Department of Economics.
    11. Eduardo P. S. Fiuza & Fabiana F. M. Tito, 2015. "Time Series Econometrics in a Post-acquisition Antitrust Analysis: the Brazilian Iron ore Market," Discussion Papers 0182, Instituto de Pesquisa Econômica Aplicada - IPEA.
    12. Haldrup, Niels & Møllgaard, Peter & Nielsen, Claus Kastberg, 2005. "Sequential versus simultaneous market," Working Papers 02-2005, Copenhagen Business School, Department of Economics.

    More about this item

    Keywords

    Market delineation; SSNIP methodology; price test; competition analysis; price data;

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • D4 - Microeconomics - - Market Structure, Pricing, and Design

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