IDEAS home Printed from https://ideas.repec.org/a/oup/jcomle/v4y2008i1p31-59..html
   My bibliography  Save this article

Forensic Economics: An Introduction With Special Emphasis On Price Fixing

Author

Listed:
  • John M. Connor

Abstract

This paper aims at explaining accepted methods of forensic analysis and how forensic economics is used in the context of competition-law enforcement. Illustrations are drawn from ancient and modern antitrust cases involving price-fixing allegations. The stated goal of antitrust laws of most nations is deterrence. Optimal deterrence requires that cartel penalties be based on multiples of economic injuries. Yet, antitrust authorities are typically reluctant to calculate fines on the basis of damages because of perceived analytical challenges or because the fact-finders lack needed economic education. However, reasonable estimates of damages can often be quickly prepared using simpler methods than econometric modeling. More often than not, alternative estimates of cartel overcharges tend to be mutually supportive. The reluctance of antitrust authorities to base fines on damages seems to indicate an abundance of caution.

Suggested Citation

  • John M. Connor, 2008. "Forensic Economics: An Introduction With Special Emphasis On Price Fixing," Journal of Competition Law and Economics, Oxford University Press, vol. 4(1), pages 31-59.
    • Handle: RePEc:oup:jcomle:v:4:y:2008:i:1:p:31-59.
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1093/joclec/nhm022
    Download Restriction: Access to full text is restricted to subscribers.
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Connor, John M., 1997. "Archer Daniels Midland: Price Fixer To The World," Staff Papers 28653, Purdue University, Department of Agricultural Economics.
    2. Joseph E. Harrington, 2004. "Post‐Cartel Pricing During Litigation," Journal of Industrial Economics, Wiley Blackwell, vol. 52(4), pages 517-533, December.
    3. Damien J. Neven, 2006. "Competition economics and antitrust in Europe [‘Comment: Airtours/First choice: CFI clips MTF's wings’]," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 21(48), pages 742-791.
    4. Luke Froeb & Gregory Werden, 2000. "An Introduction to the Symposium on the Use of Simulation in Applied Industrial Organization," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 7(2), pages 133-137.
    5. Robert H. Porter & J. Douglas Zona, 1999. "Ohio School Milk Markets: An Analysis of Bidding," RAND Journal of Economics, The RAND Corporation, vol. 30(2), pages 263-288, Summer.
    6. Simon J. Evenett, 2003. "Can Developing Economies Benefit from WTO Negotiations on Binding Disciplines for Hard Core Cartels?," Aussenwirtschaft, University of St. Gallen, School of Economics and Political Science, Swiss Institute for International Economics and Applied Economics Research, vol. 58(02), pages 215-248, June.
    7. John Connor, 2006. "Effectiveness of Antitrust Sanctions on Modern International Cartels," Journal of Industry, Competition and Trade, Springer, vol. 6(3), pages 195-223, December.
    8. Baker, Jonathan B & Rubinfeld, Daniel L, 1999. "Empirical Methods in Antitrust Litigation: Review and Critique," American Law and Economics Review, American Law and Economics Association, vol. 1(1-2), pages 386-435, Fall.
    9. Lawrence White, 2000. "Present at the Beginning of a New Era for Antitrust: Reflections on 1982–1983," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 16(2), pages 131-149, March.
    10. Gregory Werden, 2000. "Expert Report in United States v. Interstate Bakeries Corp. and Continental Baking Co," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 7(2), pages 139-148.
    11. de Roos, Nicolas, 2006. "Examining models of collusion: The market for lysine," International Journal of Industrial Organization, Elsevier, vol. 24(6), pages 1083-1107, November.
    12. Kellie Curry Raper & H. Alan Love & C. Richard Shumway, 2000. "Determining market power exertion between buyers and sellers," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 15(3), pages 225-252.
    13. William E. Kovacic & Carl Shapiro, 2000. "Antitrust Policy: A Century of Economic and Legal Thinking," Journal of Economic Perspectives, American Economic Association, vol. 14(1), pages 43-60, Winter.
    14. George Hay, 2000. "The Meaning of ``Agreement'' under the Sherman Act: Thoughts from the ``Facilitating Practices'' Experience," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 16(2), pages 113-129, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Kai Hüschelrath & Kathrin Müller & Tobias Veith, 2013. "Concrete Shoes For Competition: The Effect Of The German Cement Cartel On Market Price," Journal of Competition Law and Economics, Oxford University Press, vol. 9(1), pages 97-123.
    2. Willem H. Boshoff, 2015. "Illegal Cartel Overcharges in Markets with a Legal Cartel History: Bitumen Prices in South Africa," South African Journal of Economics, Economic Society of South Africa, vol. 83(2), pages 220-239, June.
    3. Valentiny, Pál, 2019. "Közgazdaságtan a jogalkalmazásban [Forensic economics]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(2), pages 134-162.
    4. Ghosal Vivek, 2011. "The Law and Economics of Enhancing Cartel Enforcement: Using Information From Non-Cartel Investigations to Prosecute Cartels," Review of Law & Economics, De Gruyter, vol. 7(2), pages 501-538, December.
    5. Hüschelrath, Kai & Müller, Kathrin & Veith, Tobias, 2012. "Estimating damages from price-fixing: The value of transaction data," ZEW Discussion Papers 12-036, ZEW - Leibniz Centre for European Economic Research.
    6. Johannes Paha, 2011. "Empirical methods in the analysis of collusion," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 38(3), pages 389-415, July.
    7. Siotis Georges & Martínez-Granado Maite, 2010. "Sabotaging Entry: An Estimation of Damages in the Directory Enquiry Service Market," Review of Law & Economics, De Gruyter, vol. 6(1), pages 1-57, April.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Oliver Budzinski & Isabel Ruhmer, 2010. "Merger Simulation In Competition Policy: A Survey," Journal of Competition Law and Economics, Oxford University Press, vol. 6(2), pages 277-319.
    2. Chowdhury, Subhasish M. & Crede, Carsten J., 2020. "Post-cartel tacit collusion: Determinants, consequences, and prevention," International Journal of Industrial Organization, Elsevier, vol. 70(C).
    3. Rausser, Gordon & Stuermer, Martin, 2020. "A Dynamic Analysis of Collusive Action: The Case of the World Copper Market, 1882-2016," MPRA Paper 104708, University Library of Munich, Germany.
    4. Oliver Budzinski, 2009. "Modern Industrial Economics and Competition Policy: Open Problems and Possible Limits," Working Papers 93/09, University of Southern Denmark, Department of Sociology, Environmental and Business Economics.
    5. Oliver Budzinski, 2008. "A Note on Competing Merger Simulation Models in Antitrust Cases: Can the Best Be Identified?," MAGKS Papers on Economics 200803, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    6. Bolotova, Yuliya & Connor, John M. & Miller, Douglas J., 2008. "The impact of collusion on price behavior: Empirical results from two recent cases," International Journal of Industrial Organization, Elsevier, vol. 26(6), pages 1290-1307, November.
    7. Kaplow, Louis & Shapiro, Carl, 2007. "Antitrust," Handbook of Law and Economics, in: A. Mitchell Polinsky & Steven Shavell (ed.), Handbook of Law and Economics, edition 1, volume 2, chapter 15, pages 1073-1225, Elsevier.
    8. Willem H. Boshoff, 2015. "Illegal Cartel Overcharges in Markets with a Legal Cartel History: Bitumen Prices in South Africa," South African Journal of Economics, Economic Society of South Africa, vol. 83(2), pages 220-239, June.
    9. Robert M. Feinberg & Minsoo Park, 2015. "Deterrence Effects Of Korean Antitrust Enforcement On Producer Prices And Profit Margins," Journal of Competition Law and Economics, Oxford University Press, vol. 11(4), pages 917-933.
    10. Andrey V. Makarov, 2014. "Comparative Analusis Of Antitrust Policy Against Collusion In Some Transition Economies: Challenges For Effectiveness," HSE Working papers WP BRP 20/PA/2014, National Research University Higher School of Economics.
    11. Kalyn Coatney & Jesse Tack, 2014. "The Impacts of an Antitrust Investigation: A Case Study in Agriculture," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 44(4), pages 423-441, June.
    12. Fagart, Thomas, 2022. "Collusion in capacity under irreversible investment," International Journal of Industrial Organization, Elsevier, vol. 81(C).
    13. Joseph E. Harrington, 2004. "Post‐Cartel Pricing During Litigation," Journal of Industrial Economics, Wiley Blackwell, vol. 52(4), pages 517-533, December.
    14. Stefania Grezzana, 2016. "Lost In Time And Space: The Deterrence Effect Of Cartel Busts On The Retail Gasoline Market," Anais do XLIII Encontro Nacional de Economia [Proceedings of the 43rd Brazilian Economics Meeting] 158, ANPEC - Associação Nacional dos Centros de Pós-Graduação em Economia [Brazilian Association of Graduate Programs in Economics].
    15. Kai Hüschelrath & Tobias Veith, 2014. "Cartel Detection in Procurement Markets," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 35(6), pages 404-422, September.
    16. Hüschelrath, Kai, 2008. "Is it Worth all the Trouble? The Costs and Benefits of Antitrust Enforcement," ZEW Discussion Papers 08-107, ZEW - Leibniz Centre for European Economic Research.
    17. Valentiny, Pál & Antal-Pomázi, Krisztina, 2023. "Versenyközgazdászok [Competition economists]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(6), pages 647-671.
    18. Robert Clark & Jean-François Houde, 2014. "The Effect of Explicit Communication on pricing: Evidence from the Collapse of a Gasoline Cartel," Journal of Industrial Economics, Wiley Blackwell, vol. 62(2), pages 191-228, June.
    19. de Roos, Nicolas, 2004. "A model of collusion timing," International Journal of Industrial Organization, Elsevier, vol. 22(3), pages 351-387, March.
    20. Liberty Mncube, 2014. "The South African Wheat Flour Cartel: Overcharges at the Mill," Journal of Industry, Competition and Trade, Springer, vol. 14(4), pages 487-509, December.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:oup:jcomle:v:4:y:2008:i:1:p:31-59.. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Oxford University Press (email available below). General contact details of provider: https://academic.oup.com/jcle .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.