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How Much Do Cartels Typically Overcharge?


  • Marcel Boyer
  • Rachidi Kotchoni


The estimation of cartel overcharges lie at the heart of antitrust policy on cartel proscution as it constitutes a basic element in the determination of fines. Connor and Lande (2008) conducted a survey of cartels and found a mean overcharge estimates in the range of 31% to 49%. By examining more sources, Connor (2010) finds a mean of 50.4% for successful cartels. However, the data used in those studies are estimates obtained in different ways, sources and contexts rather direct observations. Therefore, these data are subject to model error, estimation error and publication bias. A quick glance at the Connor database reveals that the universe of overcharge estimates is asymmetric, heterogenous and contains a number of influential observations. Beside the fact that overcharge estimates are potentially biased, fitting a linear regression model to the data without providing a carefull treatment of the problems raised above may produce distorted results. We conduct a meta-analysis of cartel overcharge estimates in the spirit of Connor and Bolotova (2006) while providing a sound treatment of those matters. We find typical bias-corrected mean and median overcharge estimates of 13.62% and 13.63% for cartels with initial overcharge estimates lying between 0% and 50% and bias-corrected mean and median overcharges estimates of 17.52% and 14.05% for the whole sample. Clearly, our results have significant antitrust policy implications. L'estimation des surprix des cartels est au cur de la politique de lutte aux cartels, car elle est un élément clé de la détermination des pénalités. Connor et Lande (2008) survolent la littérature sur les majorations de prix des cartels et concluent à une augmentation moyenne variant entre 31 % et 49 %. Considérant un échantillon plus grand, Connor (2010) trouve une moyenne de 50,4 % pour les cartels réussis. Cependant, les échantillons utilisés dans ces études sont constitués d'estimations venant de différentes études ou cas et non pas d'observations directes. De ce fait, ces échantillons héritent possiblement d'erreurs de modélisation et d'estimation, ainsi que d'un biais de publication. Une analyse sommaire des surprix dans l'échantillon de Connor révèle une distribution asymétrique, de l'hétérogénéité et la présence d'observations aberrantes. Ainsi, au-delà du fait que les estimations des surprix sont potentiellement biaisées, l'estimation d'un modèle de régression linéaire avec de telles données sans un traitement adéquat des problèmes ci-dessus pourrait produire des distorsions dans les résultats. Nous présentons une méta-analyse dans l'esprit de Connor and Bolotova (2006), mais qui tient compte adéquatement des problèmes mentionnés ci-dessus. Après correction du biais d'estimation, nos résultats suggèrent que la moyenne et la médiane des majorations de prix sont de l'ordre de 13,62 % avec une médiane de 13,63 % pour les cartels dont les majorations de prix se situaient initialement entre 0 % et 50 % et de l'ordre de 17,52 % avec une médiane de 14,05 % pour l'ensemble des cartels. Nos résultats débouchent sur des enjeux importants en politique de la concurrence.

Suggested Citation

  • Marcel Boyer & Rachidi Kotchoni, 2012. "How Much Do Cartels Typically Overcharge?," CIRANO Working Papers 2012s-15, CIRANO.
  • Handle: RePEc:cir:cirwor:2012s-15

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    References listed on IDEAS

    1. Gary S. Becker, 1974. "Crime and Punishment: An Economic Approach," NBER Chapters,in: Essays in the Economics of Crime and Punishment, pages 1-54 National Bureau of Economic Research, Inc.
    2. Appelbaum, Elie, 1979. "Testing price taking behavior," Journal of Econometrics, Elsevier, vol. 9(3), pages 283-294, February.
    3. Marie-Laure Allain & Marcel Boyer & Rachidi Kotchoni & Jean-Pierre Ponssard, 2011. "The Determination of Optimal Fines in Cartel Cases The Myth of Underdeterrence," Working Papers hal-00631432, HAL.
    4. Catherine J. Morrison, 1990. "Market Power, Economic Profitability and Productivity Growth Measurement: An Integrated Structural Approach," NBER Working Papers 3355, National Bureau of Economic Research, Inc.
    5. Levenstein, Margaret & Suslow, Valerie Y. & Oswald, Lynda J., 2003. "Contemporary International Cartels And Developing Countries: Economic Effects And Implications For Competition Policy," Working Papers 14590, International Agricultural Trade Research Consortium.
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    Cited by:

    1. Allain, Marie-Laure & Boyer, Marcel & Kotchoni, Rachidi & Ponssard, Jean-Pierre, 2015. "Are cartel fines optimal? Theory and evidence from the European Union," International Review of Law and Economics, Elsevier, vol. 42(C), pages 38-47.
    2. 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.
    3. Joseph E. Harrington, Jr. & Yanhao Wei, 2014. "What Can the Duration of Discovered Cartels Tell Us About the Duration of Cartels?," PIER Working Paper Archive 14-042, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
    4. Marcel Boyer & Rachidi Kotchoni, 2015. "How Much Do Cartel Overcharge? (The "Working Paper" Version)," CIRANO Working Papers 2015s-37, CIRANO.

    More about this item


    Cartel overcharges; Antitrust; Heckman; Meta-analysis; Surprix de cartel; Politique de la concurrence; Heckman; Meta-analyse;

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