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Post-Cartel Pricing during Litigation

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  • Joseph E Harrington Jr

Abstract

Standard methods in the U.S. for calculating antitrust damages in price-fixing cases is shown to create a strategic incentive for firms to price above the non-collusive price after the cartel has dissolved. This results in an overestimate of the but for price and an underestimate of the level of damages. The extent of this upward bias in the but for price is greater, the longer the cartel was in place and the more concentrated is the industry.

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Bibliographic Info

Paper provided by The Johns Hopkins University,Department of Economics in its series Economics Working Paper Archive with number 488.

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Date of creation: Dec 2002
Date of revision: Jun 2003
Handle: RePEc:jhu:papers:488

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References

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  1. Robert H. Porter & J. Douglas Zona, 1997. "Ohio School Milk Markets: An Analysis of Bidding," NBER Working Papers 6037, National Bureau of Economic Research, Inc.
  2. Bryant, Peter G & Eckard, E Woodrow, Jr, 1991. "Price Fixing: The Probability of Getting Caught," The Review of Economics and Statistics, MIT Press, vol. 73(3), pages 531-36, August.
  3. John M. Connor, 2000. "Archer Daniels Midland:Price Fixer To The World," Working Papers 00-11, Purdue University, College of Agriculture, Department of Agricultural Economics.
  4. Lawrence J. White, 1999. "Lysine and Price Fixing: How Long? How Severe?," Working Papers 99-02, New York University, Leonard N. Stern School of Business, Department of Economics.
  5. Xavier Vives, 2001. "Oligopoly Pricing: Old Ideas and New Tools," MIT Press Books, The MIT Press, edition 1, volume 1, number 026272040x, January.
  6. John M. Connor, 1998. "What Can We Learn From The Adm Global Price Conspiracies?," Working Papers 98-14, Purdue University, College of Agriculture, Department of Agricultural Economics.
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Citations

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Cited by:
  1. Louis Kaplow & Carl Shapiro, 2007. "Antitrust," NBER Working Papers 12867, National Bureau of Economic Research, Inc.
  2. Gregory Werden, 2008. "Assessing the Effects of Antitrust Enforcement in the United States," De Economist, Springer, vol. 156(4), pages 433-451, December.
  3. Fonseca, Miguel A. & Normann, Hans-Theo, 2012. "Explicit vs. tacit collusion: The impact of communication in oligopoly experiments," DICE Discussion Papers 65, Heinrich‐Heine‐Universität Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
  4. Mats Bergman, 2008. "Quis Custodiet Ipsos Custodes? or Measuring and Evaluating the Effectiveness of Competition Enforcement," De Economist, Springer, vol. 156(4), pages 387-409, December.
  5. Joseph E. Harrington, Jr, 2005. "Detecting Cartels," Economics Working Paper Archive 526, The Johns Hopkins University,Department of Economics.
  6. Beschorner, Patrick Frank Ernst & Hüschelrath, Kai, 2009. "Ökonomische Aspekte der privaten Durchsetzung des Kartellrechts," ZEW Discussion Papers 09-075, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  7. 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.
  8. Roman Inderst & Frank Maier-Rigaud & Ulrich Schwalbe, 2013. "Quantifizierung von Schäden durch Wettbewerbsverstöße," Working Papers 2013-ECO-08, IESEG School of Management.
  9. Joseph E. Harrington, Jr, 2006. "How Do Cartels Operate?," Economics Working Paper Archive 531, The Johns Hopkins University,Department of Economics.
  10. Joseph E Harrington Jr & Joe Chen, 2002. "Cartel Pricing Dynamics with Cost Variability and Endogenous Buyer Detection," Economics Working Paper Archive 514, The Johns Hopkins University,Department of Economics, revised Sep 2004.
  11. Erutku, Can, 2012. "Testing post-cartel pricing during litigation," Economics Letters, Elsevier, vol. 116(3), pages 339-342.
  12. Hans W. Friederiszick & Lars-Hendrik Röller, 2010. "Quantification of Harm in Damages Actions for Antitrust Infringements: Insights from German Cartel Cases," ESMT Research Working Papers ESMT-10-001, ESMT European School of Management and Technology.
  13. António Brandão & Luís Guimarães & Carlos Seixas, 2011. "The Relationship between Trigger Price and Punishment Period in Green and Porter (1984) Game made Endogenous," FEP Working Papers 432, Universidade do Porto, Faculdade de Economia do Porto.

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