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Estimating overcharges in antitrust cases using a reduced-form approach: Methods and issues

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Abstract

This paper presents several methods and discusses salient issues pertaining to the use of reduced-form models to estimate overcharges in antitrust matters (e.g., price-fixing) where "but-for" prices may be less than actual prices during the anticompetitive period. In particular, two common types of reduced-form estimations are discussed: the "dummyvariable approach" and the "forecasting approach". Under either methodology, an error correction model is then specified as one way to address technical problems often found in applied time-series analysis - nonstationary data and the existence of short-term and longterm dynamics.

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  • James F. Nieberding, 2006. "Estimating overcharges in antitrust cases using a reduced-form approach: Methods and issues," Journal of Applied Economics, Universidad del CEMA, vol. 9, pages 361-380, November.
  • Handle: RePEc:cem:jaecon:v:9:y:2006:n:2:p:361-380
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    File URL: https://ucema.edu.ar/publicaciones/download/volume9/nieberding.pdf
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    References listed on IDEAS

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    1. Mario Forni, 2004. "Using Stationarity Tests in Antitrust Market Definition," American Law and Economics Review, Oxford University Press, vol. 6(2), pages 441-464.
    2. Baker, Jonathan B & Rubinfeld, Daniel L, 1999. "Empirical Methods in Antitrust Litigation: Review and Critique," American Law and Economics Review, Oxford University Press, vol. 1(1-2), pages 386-435, Fall.
    3. John M. Connor, 2004. "Global Antitrust Prosecutions of Modern International Cartels," Journal of Industry, Competition and Trade, Springer, vol. 4(3), pages 239-267, September.
    4. Higgins, Richard S. & Johnson, Paul A., 2003. "The mean effect of structural change on the dependent variable is accurately measured by the intercept change alone," Economics Letters, Elsevier, vol. 80(2), pages 255-259, August.
    5. Margaret C. Levenstein & Valerie Y. Suslow, 2002. "What Determines Cartel Success?," UMASS Amherst Economics Working Papers 2002-01, University of Massachusetts Amherst, Department of Economics.
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    Citations

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    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. Marcel Boyer & Anne Catherine Faye & Rachidi Kotchoni, 2017. "Challenges and Pitfalls in Cartel Policy and Fining," CIRANO Working Papers 2017s-20, CIRANO.
    3. repec:kap:revind:v:54:y:2019:i:3:d:10.1007_s11151-018-9649-5 is not listed on IDEAS
    4. Marcel Boyer & Rachidi Kotchoni, 2015. "How Much Do Cartel Overcharge?," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 47(2), pages 119-153, September.
    5. H. Peter Boswijk & Maurice J. G. Bun & Maarten Pieter Schinkel, 2019. "Cartel dating," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 34(1), pages 26-42, January.
    6. Doose, Anna Maria, 2013. "Methods for calculating cartel damages: A survey," Ilmenau Economics Discussion Papers 83, Ilmenau University of Technology, Institute of Economics.
    7. 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.
    8. Welter, Dominik & Napel, Stefan, 2016. "Responsibility-based allocation of cartel damages," Annual Conference 2016 (Augsburg): Demographic Change 145886, Verein für Socialpolitik / German Economic Association.
    9. Chiarella, Carl & He, Xue-Zhong & Zwinkels, Remco C.J., 2014. "Heterogeneous expectations in asset pricing: Empirical evidence from the S&P500," Journal of Economic Behavior & Organization, Elsevier, vol. 105(C), pages 1-16.
    10. Marcel Boyer & Rachidi Kotchoni, 2015. "How Much Do Cartel Overcharge? (The "Working Paper" Version)," CIRANO Working Papers 2015s-37, CIRANO.

    More about this item

    Keywords

    price-fixing; time-series; reduced-form; estimated overcharges; antitrust;

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
    • L4 - Industrial Organization - - Antitrust Issues and Policies

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