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Empirical Methods in the Analysis of Collusion


  • Johannes Paha

    () (Justus-Liebig-University Giessen)


Regression methods are commonly used in competition lawsuits for, e.g., determining overcharges in pricefixing cases. Technical evaluations of these methods' pros and cons are not necessarily intuitive. Appraisals that are based on case studies are descriptive but need not be universally valid. This paper opens up the black box called econometrics for competition cases. This is done by complementing theoretical arguments with estimation results. These results are obtained for data that is generated by a simulation-model of a collusive industry. Using such data leaves little room for debate about the quality of these methods because estimates of, e.g., overcharges can be compared to their true underlying values. This analysis provides arguments for demonstrating that thoroughly conducted econometric analyses yield better results than simple techniques such as before-and-after comparisons.

Suggested Citation

  • Johannes Paha, 2010. "Empirical Methods in the Analysis of Collusion," MAGKS Papers on Economics 201033, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
  • Handle: RePEc:mar:magkse:201033

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    References listed on IDEAS

    1. Heij, Christiaan & de Boer, Paul & Franses, Philip Hans & Kloek, Teun & van Dijk, Herman K., 2004. "Econometric Methods with Applications in Business and Economics," OUP Catalogue, Oxford University Press, number 9780199268016.
    2. Hausman, William J., 1984. "Cheap Coals or Limitation of the Vend? The London Coal Trade, 1770–1845," The Journal of Economic History, Cambridge University Press, vol. 44(02), pages 321-328, June.
    3. Rotemberg, Julio J & Saloner, Garth, 1986. "A Supergame-Theoretic Model of Price Wars during Booms," American Economic Review, American Economic Association, vol. 76(3), pages 390-407, June.
    4. Prokop, Jacek, 1999. "Process of dominant-cartel formation," International Journal of Industrial Organization, Elsevier, vol. 17(2), pages 241-257, February.
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    Cited by:

    1. Willem H. Boshoff, 2015. "Illegal Cartel Overcharges in Markets with a Legal Cartel History: Bitumen Prices in South Africa," South African Journal of Economics, Economic Society of South Africa, vol. 83(2), pages 220-239, June.
    2. Johannes Paha, 2012. "Using accounting data in cartel damage calculations: blessing or menace?," European Journal of Law and Economics, Springer, vol. 34(2), pages 241-263, October.
    3. Johannes Paha, 2010. "Simulation and Prosecution of a Cartel with Endogenous Cartel Formation," MAGKS Papers on Economics 201007, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).

    More about this item


    Collusion; Empirical Methods; Industry Simulation;

    JEL classification:

    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices


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