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Estimating Overcharges in Antitrust Cases Using a Reduced-Form Approach: Methods and Issues

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  • James F. Nieberding

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 “dummy-variable 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 long- term 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, Taylor & Francis Journals, vol. 9(2), pages 361-380, November.
    • Handle: RePEc:taf:recsxx:v:9:y:2006:i:2:p:361-380
    DOI: 10.1080/15140326.2006.12040652
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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. Carsten J. Crede, 2019. "A Structural Break Cartel Screen for Dating and Detecting Collusion," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 54(3), pages 543-574, May.
    4. Carsten J. Crede, 2015. "A structural break cartel screen for dating and detecting collusion," Working Paper series, University of East Anglia, Centre for Competition Policy (CCP) 2015-11, Centre for Competition Policy, University of East Anglia, Norwich, UK..
    5. 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.
    6. 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.
    7. Deng Ai, 2020. "Measuring Benchmark Damages in Antitrust Litigation: Extensions and Practical Implications," Journal of Econometric Methods, De Gruyter, vol. 9(1), pages 1-12, January.
    8. Michael D. Hausfeld & Gordon C. Rausser & Gareth J. Macartney & Michael P. Lehmann & Sathya S. Gosselin, 2014. "Antitrust class proceedings – Then and now," Research in Law and Economics, in: The Law and Economics of Class Actions, volume 26, pages 77-133, Emerald Group Publishing Limited.
    9. Willem H. Boshoff, 2021. "South African competition policy on excessive pricing and its relation to price gouging during the COVID‐19 disaster period," South African Journal of Economics, Economic Society of South Africa, vol. 89(1), pages 112-140, March.
    10. Doose, Anna Maria, 2013. "Methods for calculating cartel damages: A survey," Ilmenau Economics Discussion Papers 83, Ilmenau University of Technology, Institute of Economics.
    11. 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.
    12. Welter, Dominik & Napel, Stefan, 2016. "Responsibility-based allocation of cartel damages," VfS Annual Conference 2016 (Augsburg): Demographic Change 145886, Verein für Socialpolitik / German Economic Association.
    13. 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.
    14. Tsay, Wen-Jen, 2021. "Estimating cartel damages with model averaging approaches," International Review of Law and Economics, Elsevier, vol. 68(C).
    15. Marcel Boyer & Rachidi Kotchoni, 2015. "How Much Do Cartel Overcharge? (The "Working Paper" Version)," CIRANO Working Papers 2015s-37, CIRANO.
    16. Kuuluvainen, Jari & Korhonen, Jaana & Wang, Lanhui & Toppinen, Anne, 2021. "Wood market cartel in Finland 1997–2004: Analyzing price effects using the indicator approach," Forest Policy and Economics, Elsevier, vol. 124(C).

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