Using Stationarity Tests in Antitrust Market Definition

20 Pages Posted: 28 Mar 2002

See all articles by Mario Forni

Mario Forni

Università degli studi di Modena e Reggio Emilia (UNIMORE) - Faculty of Business and Economics; Centre for Economic Policy Research (CEPR)

Date Written: February 2002

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.

Keywords: Anti-trust market definition, merger guidelines, stationarity, Dickey-Fuller test, KPSS test

JEL Classification: L41

Suggested Citation

Forni, Mario, Using Stationarity Tests in Antitrust Market Definition (February 2002). CEPR Discussion Paper No. 3236. Available at SSRN: https://ssrn.com/abstract=305420

Mario Forni (Contact Author)

Università degli studi di Modena e Reggio Emilia (UNIMORE) - Faculty of Business and Economics ( email )

Viale Berengario 51
41100 Modena, Modena 41100
Italy
+39 059 205 6852 (Phone)
+39 059 205 6947 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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