Abstract: We consider a vertically related industry and analyze how the total harm due to a price increase upstream is distributed over downstream firms and final consumers. For this purpose, we develop a general model without making specific assumptions regarding demand, costs, or the mode of competition. We consider both the case of homogeneous and differentiated goods markets. Furthermore, we discuss data requirements and suggest explicit formulas and regression specifications that can be used to estimate the relevant terms in the harm distribution in practice, even if elevated upstream prices are rather constant over time. The latter can be achieved by considering perturbations of the demand curve. This in turn can be used to construct a supply curve for the case of imperfect competition that includes perfect competition and monopoly as special cases. Finally, we illustrate how basic intuition from the tax incidence literature carries over to the distribution of harm. Keywords: cartel, abuse of a dominant position, pass on defence, apportionment of harm, supply curve, tax incidence JEL Classifications: D43, L42, L13
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Paper provided by Tilburg University, Tilburg Law and Economic Center in its series Discussion Paper with number
2008-030.
References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
Don Fullerton & Gilbert E. Metcalf, 2002.
"Tax Incidence,"
NBER Working Papers
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[Downloadable!] (restricted)
Other versions:
Fullerton, Don & Metcalf, Gilbert E., 2002.
"Tax incidence,"
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in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 4, chapter 26, pages 1787-1872
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[Downloadable!] (restricted)
Schinkel, M.P. & Tuinstra, J. & Rueggeberg, J., 2004.
"Illinois Walls,"
CeNDEF Working Papers
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[Downloadable!]
Other versions:
Schinkel,Maarten Pieter & Rüggeberg,Jakob & Tuinstra,Jan, 2003.
"Illinois Walls,"
Research Memoranda
027, Maastricht : METEOR, Maastricht Research School of Economics of Technology and Organization.
[Downloadable!]