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An Analysis Of Price-Based Tests Of Antitrust Market Delineation

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  • Patrick J. Coe
  • David Krause

Abstract

There are well-known theoretical concerns regarding the use of price correlations to determine antitrust markets. However, this has not deterred their use or the application of Granger causality, stationarity, and cointegration tests in the determination of antitrust markets. In this paper, we explore the empirical performance of these various tests. In particular, we want to know whether these tests are capable of generating the correct inference both when two products are in the same relevant market and when they are not. Our results imply that, in the absence of common shocks, simple price correlations may be capable of providing reliable evidence on market delineation. However, in samples sizes similar to those currently available, the performance of other commonly employed price-based tests suggests that they provide little economically meaningful information to antitrust practitioners.

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  • Patrick J. Coe & David Krause, 2008. "An Analysis Of Price-Based Tests Of Antitrust Market Delineation," Journal of Competition Law and Economics, Oxford University Press, vol. 4(4), pages 983-1007.
    • Handle: RePEc:oup:jcomle:v:4:y:2008:i:4:p:983-1007.
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    File URL: http://hdl.handle.net/10.1093/joclec/nhn008
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    Citations

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    Cited by:

    1. Sergio Aquino de Souza & Eduardo Pontual Ribeiro & Gerson Carvalho, 2010. "Documento de Trabalho 01/2010 - Delimitação de Mercado Relevante," Documentos de Trabalho 2010010, Conselho Administrativo de Defesa Econômica (Cade), Departamento de Estudos Econômicos.
    2. Ribeiro, Eduardo Pontual & Castor, Kamaiaji, 2019. "Inferring bank-to-bank competition from dynamic time series analysis of price correlations," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 56, pages 62-73.
    3. Alison Oldale & Joel Schrag & Christopher Taylor, 2021. "The 2010 Horizontal Merger Guidelines at Ten: A View from the FTC’s Bureau of Economics," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 58(1), pages 33-50, February.
    4. Sergio Aquino de Souza & Eduardo Pontual Ribeiro & Gerson Carvalho, 2010. "Documento de Trabalho 01/2010 - Delimitação de Mercado Relevante," Documentos de Trabalho 12010, Conselho Administrativo de Defesa Econômica (Cade), Departamento de Estudos Econômicos.
    5. Zipitria, Leandro, 2010. "New Directions in Price Test for Market Definition," MPRA Paper 58046, University Library of Munich, Germany.
    6. Daniel Greenfield & Bruce Kobayashi & Jeremy Sandford & Christopher Taylor & Nathan Wilson, 2019. "Economics at the FTC: Quantitative Analyses of Two Chemical Manufacturing Mergers," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 55(4), pages 607-623, December.
    7. Vladimír Hajko & Jaroslav Bil, 2013. "The Relevant Markets for Meat Production and Processing in the Czech Republic: Analysis of the Price Movements," Czech Economic Review, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, vol. 7(3), pages 178-197, November.

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