Advanced Search
MyIDEAS: Login to save this paper or follow this series

Tracing the Base: A Topographic Test for Collusive Basing-Point Pricing

Contents:

Author Info

  • Iwan Bos

    (University of Amsterdam)

  • Maarten Pieter Schinkel

    (University of Amsterdam)

Registered author(s):

Abstract

Basing-point pricing is known to have been abused by geographically dispersed firms in order to eliminate competition on transportation costs. This paper develops a topographic test for collusive basing-point pricing. The method uses transaction data (prices, quantities) and customer project site locations to recover the basing-point(s) from which delivered prices were calculated. These bases are compared to the locations of the production mills in a test that discriminates between competitive and collusive basing-point pricing. We define a measure for the likelihood of collusion that can be used to screen industries that traditionally apply delivered pricing for the presence of cartels. We operationalize this screen with a software. The test is hard to beat for cartels using this otherwise elusive form of price-fixing. When a cartel was found to have abused the basing-point system, our method can be used to estimate antitrust damages.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://papers.tinbergen.nl/09007.pdf
Download Restriction: no

Bibliographic Info

Paper provided by Tinbergen Institute in its series Tinbergen Institute Discussion Papers with number 09-007/1.

as in new window
Length:
Date of creation: 20 Jan 2009
Date of revision:
Handle: RePEc:dgr:uvatin:20090007

Contact details of provider:
Web page: http://www.tinbergen.nl

Related research

Keywords: basing-point pricing; cartels; detection; antitrust; damages;

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:

References

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.:
as in new window
  1. Joseph E. Harrington, Jr, 2005. "Detecting Cartels," Economics Working Paper Archive 526, The Johns Hopkins University,Department of Economics.
  2. Soper, Jean B, et al, 1991. "Basing Point Pricing and Production Concentration," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 101(406), pages 539-56, May.
  3. Thisse, J.-F. & Vives, X., 1987. "On the strategic choice of spatial price policy," CORE Discussion Papers, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) 1987008, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  4. Haddock, David D, 1982. "Basing-Point Pricing: Competitive vs. Collusive Theories," American Economic Review, American Economic Association, vol. 72(3), pages 289-306, June.
  5. Maria Paz Espinosa, 1992. "Delivered Pricing, FOB Pricing, and Collusion in Spatial Markets," RAND Journal of Economics, The RAND Corporation, vol. 23(1), pages 64-85, Spring.
  6. Maarten Pieter Schinkel & Jan Tuinstra & Jakob Rüggeberg, 2008. "Illinois Walls: how barring indirect purchaser suits facilitates collusion," RAND Journal of Economics, RAND Corporation, vol. 39(3), pages 683-698.
  7. Robert H. Porter & J. Douglas Zona, 1992. "Detection of Bid Rigging in Procurement Auctions," NBER Working Papers 4013, National Bureau of Economic Research, Inc.
  8. Cabou, Christian G & Haddock, David D & Thorne, Michele H, 1992. "An Analytic History of Delivered Price Litigation: Do Courts Properly Distinguish Rivalrous from Collusive Instances?," Economic Inquiry, Western Economic Association International, Western Economic Association International, vol. 30(2), pages 307-21, April.
  9. 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.
  10. Robert Porter, 2005. "Detecting Collusion," Review of Industrial Organization, Springer, Springer, vol. 26(2), pages 147-167, December.
  11. Abrantes-Metz, Rosa M. & Froeb, Luke M. & Geweke, John & Taylor, Christopher T., 2006. "A variance screen for collusion," International Journal of Industrial Organization, Elsevier, Elsevier, vol. 24(3), pages 467-486, May.
  12. Gilligan, Thomas W, 1992. "Imperfect Competition and Basing-Point Pricing: Evidence from the Softwood Plywood Industry," American Economic Review, American Economic Association, vol. 82(5), pages 1106-19, December.
  13. Patrick Bajari & Lixin Ye, 2003. "Deciding Between Competition and Collusion," The Review of Economics and Statistics, MIT Press, vol. 85(4), pages 971-989, November.
Full references (including those not matched with items on IDEAS)

Citations

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:dgr:uvatin:20090007. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Antoine Maartens (+31 626 - 160 892)).

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 references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link 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 profile, as there may be some citations waiting for confirmation.

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