Review of Industrial Organization

, Volume 4, Issue 2, pp 79–98 | Cite as

Price correlation and granger causality tests for market definition

  • Phillip A. Cartwright
  • David R. Kamerschen
  • Mei-Ying Huang


The static price correlation test for determining the relevant product and geographic market is critically examined and then extended to (arguably) localized markets for products such as cement, gravel, sand, crushed stone, concrete, and asphalt products. The empirical results lead to the conclusion that the price correlation test is as generally applicable for testing for local markets as it is for testing for citywide or larger markets. The Granger causality model is used alternatively to test market definition empirically. The results suggest that the Granger causality test may be a useful supplement to the price correlation test in delineating markets.


Empirical Result Correlation Test Local Market Industrial Organization Granger Causality 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.


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Copyright information

© Industrial Organization Society Arizona State University 1989

Authors and Affiliations

  • Phillip A. Cartwright
    • 1
  • David R. Kamerschen
    • 1
  • Mei-Ying Huang
    • 2
  1. 1.Department of EconomicsUniversity of GeorgiaUSA
  2. 2.Department of EconomicsNational Chung-Hsing UniversityUSA

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