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The Distribution of Harm in Price-Fixing Cases

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  • Boone, Jan
  • Müller, Wieland

Abstract

We consider a vertically related industry and analyze how the total harm due to a price increase upstream is distributed over downstream firms and final consumers. For this purpose, we develop a general model without making specific assumptions regarding demand, costs, or the mode of competition. We consider both the case of homogeneous and differentiated goods markets. Furthermore, we discuss data requirements and suggest explicit formulas and regression specifications that can be used to estimate the relevant terms in the harm distribution in practice, even if elevated upstream prices are rather constant over time. The latter can be achieved by considering perturbations of the demand curve. This in turn can be used to construct a supply curve for the case of imperfect competition that includes perfect competition and monopoly as special cases. Finally, we illustrate how basic intuition from the tax incidence literature carries over to the distribution of harm.

Suggested Citation

  • Boone, Jan & Müller, Wieland, 2008. "The Distribution of Harm in Price-Fixing Cases," CEPR Discussion Papers 6949, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:6949
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    References listed on IDEAS

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    Cited by:

    1. Doose, Anna Maria, 2013. "Methods for calculating cartel damages: A survey," Ilmenau Economics Discussion Papers 83, Ilmenau University of Technology, Institute of Economics.

    More about this item

    Keywords

    abuse of a dominant position; apportionment of harm; cartel; pass on defense; supply curve; tax incidence;

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L42 - Industrial Organization - - Antitrust Issues and Policies - - - Vertical Restraints; Resale Price Maintenance; Quantity Discounts

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