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Quantitative competition analysis: Stationarity tests in geographic market definition

  • Willem Boshoff


    (Department of Economics, University of Stellenbosch)

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 Function: First version, 2006
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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
Date of revision:
Handle: RePEc:sza:wpaper:wpapers31
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  1. 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.
  2. 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.
  3. 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.
  4. Perron, P. & Ng, S., 1994. "Useful Modifications to Some Unit Root Tests with Dependent Errors and Their Local Asymptotic Properties," Cahiers de recherche 9427, Centre interuniversitaire de recherche en économie quantitative, CIREQ.
  5. 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 555-85, October.
  6. Mario Forni, 2004. "Using Stationarity Tests in Antitrust Market Definition," American Law and Economics Review, Oxford University Press, vol. 6(2), pages 441-464.
  7. Geroski, Paul A, 1997. "Thinking Creatively About Markets," CEPR Discussion Papers 1694, C.E.P.R. Discussion Papers.
  8. 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.
  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.
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