Lisbeth la Cour

Market Domination: Tests Applied to the Danish Cement Industry

We propose an economic interpretation of the definition of a dominant position used by the European Court of Justice (ECJ). Then we apply co-integration techniques to test econometrically whether the sole Danish producer of cement holds a dominant position. Import penetration tests show that its conduct is independent of import price and quantity, so it can act to a considerable extent independently of its competitors. We also test whether it can act independently of its customers and find that its demand is inelastic with respect to its price. It thus holds a dominant position on the relevant Danish market.

A PARAMETRIC CHARACTERIZATION OF INTEGRATED VECTOR AUTOREGRESSIVE (VAR) PROCESSES

This paper provides a polynomial factorization theorem that is then used to extend the characterization parts of the parametric representation theorems of Johansen (1992, Econometric Theory 8, 188–202) for vector autoregressive processes integrated of up to order 2. A characterization theorem is provided in the general case of an I(d) process. For the discussion of the complicated polynomial cointegration properties of such processes, the case of an I(3) process is considered as an example.

The sale of alcohol in Denmark – recent developments and dependencies on prices/taxes

How do prices affect the choice of types of alcohol in Denmark? We study the Danish sale of alcoholic beverages in a time series framework. First, we look at annual data from 1980 investigating the hypothesis of a fairly stable level of sales. We conclude stationarity of sales and we also find that the income elasticity of total sales has been zero. Second, we analyse the composition of the alcohol sale between beer, wine and spirits in a multivariate model conditional on the development in prices. For this analysis we use Johansen cointegration techniques. Again we test that income can be omitted from the model and we use the model to derive the effects on the composition of alcohol sales of three different sets of changes in the alcohol taxation.