Stationarity Tests in Geographic Market Definition: An Application to South African Milk Markets
South African Journal of Economics, Vol. 75, No. 1, pp. 52-65, 2007
Posted: 27 Mar 2010
Date Written: March 1, 2007
Abstract
The paper focuses on the delineation of geographic markets in competition analysis, investigating the use of tests of price co-movement 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.
Keywords: market definition, unit root, panel unit root, delineation, quantitative, stationarity tests, prices
JEL Classification: L4, L41, L43, D4
Suggested Citation: Suggested Citation