How Much Do Cartels Overcharge?
The estimation of cartel overcharges lies at the heart of antitrust policy on cartel prosecution as it constitutes a key element in the determination of fines. Connor and Lande (2008) conducted a survey of cartels and found a mean overcharge estimate 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 from different methodologies, sources and contexts rather than by direct observations. Therefore, these data are subject to model error, estimation error and publication bias. A quick examination of the Connor database reveals that the universe of overcharge estimate is asymmetric, heterogenous and contains a number of influential observations. Beside the fact that overcharge estimate 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 estimate in the spirit of Connor and Bolotova (2006) while providing a sound treatment of these matters. We find a bias-corrected mean and median overcharge estimate of 15.76% and 16.43%. Clearly, our results have significant antitrust policy implications.
|Date of creation:||31 Jan 2014|
|Date of revision:|
|Contact details of provider:|| Phone: (+33) 5 61 12 86 23|
Web page: http://www.tse-fr.eu/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Harrington, Joseph E., 2014. "Penalties and the deterrence of unlawful collusion," Economics Letters, Elsevier, vol. 124(1), pages 33-36.
- Gary S. Becker, 1974.
"Crime and Punishment: An Economic Approach,"
in: Essays in the Economics of Crime and Punishment, pages 1-54
National Bureau of Economic Research, Inc.
- Werden, G.J. & Koyak, R.A. & Froeb, L.M., 1993.
"What Is the Effect of Bid-Rigging on Prices,"
93-2, U.S. Department of Justice - Antitrust Division.
- 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. 0, pages 361-380, November.
- Marcel Boyer & Rachidi Kotchoni, 2011.
"The Econometrics of Cartel Overcharges,"
- Kovacic, William E. & Shapiro, Carl, 1999.
"Antitrust Policy: A Century of Economic and Legal Thinking,"
Competition Policy Center, Working Paper Series
qt5zb4g387, Competition Policy Center, Institute for Business and Economic Research, UC Berkeley.
- William E. Kovacic & Carl Shapiro, 2000. "Antitrust Policy: A Century of Economic and Legal Thinking," Journal of Economic Perspectives, American Economic Association, vol. 14(1), pages 43-60, Winter.
- William E. Kovacic & Carl Shapiro, 2003. "Antitrust Policy: A Century of Economic and Legal Thinking," Law and Economics 0303006, EconWPA.
- Yannis Katsoulacos & David Ulph, 2013. "Antitrust Penalties and the Implications of Empirical Evidence on Cartel Overcharges," Economic Journal, Royal Economic Society, vol. 123(11), pages F558-F581, November.
- Lawrence J. White, 1999.
"Lysine and Price Fixing: How Long? How Severe?,"
99-02, New York University, Leonard N. Stern School of Business, Department of Economics.
- Marcel Boyer & Rachidi Kotchoni, 2012. "How Much Do Cartels Typically Overcharge?," CIRANO Working Papers 2012s-15, CIRANO.
- 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.
- Heckman, James, 2013.
"Sample selection bias as a specification error,"
Publishing House "SINERGIA PRESS", vol. 31(3), pages 129-137.
- Unknown, 2010. "Comment on Antitrust Sanctions," CPI Journal, Competition Policy International, vol. 6.
- Douglas Ginsburg & Joshua Wright, 2010. "Antitrust Sanctions," CPI Journal, Competition Policy International, vol. 6.
- Hall, Robert E, 1988.
"The Relation between Price and Marginal Cost in U.S. Industry,"
Journal of Political Economy,
University of Chicago Press, vol. 96(5), pages 921-47, October.
- Robert E. Hall, 1986. "The Relation Between Price and Marginal Cost in U.S. Industry," NBER Working Papers 1785, National Bureau of Economic Research, Inc.
- Marie-Laure Allain & Marcel Boyer & Jean-Pierre Ponssard, 2011. "The determination of optimal fines in cartel cases: Theory and practice," Post-Print hal-00643945, HAL.
- Marie-Laure Allain & Marcel Boyer & Rachidi Kotchoni & Jean-Pierre Ponssard, 2011.
"The Determination of Optimal Fines in Cartel Cases The Myth of Underdeterrence,"
- Marie-Laure Allain & Marcel Boyer & Rachidi Kotchoni & Jean-Pierre Ponssard, 2011. "The Determination of Optimal Fines in Cartel Cases - The Myth of Underdeterrence," CIRANO Working Papers 2011s-34, CIRANO.
- Marie-Laure Allain & Marcel Boyer & Rachidi Kotchoni & Jean-Pierre Ponssard, 2013.
"Are Cartel Fines Optimal? Theory and Evidence from the European Union,"
CIRANO Working Papers
- 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.
- Appelbaum, Elie, 1979. "Testing price taking behavior," Journal of Econometrics, Elsevier, vol. 9(3), pages 283-294, February.
- Harold Houba & Evgenia Motchenkova & Quan Wen, 2014. "The Role of Legal Principles in the Economic Analysis of Competition Policy," World Scientific Book Chapters, in: THE ANALYSIS OF COMPETITION POLICY AND SECTORAL REGULATION, chapter 14, pages 389-421 World Scientific Publishing Co. Pte. Ltd..
- 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.
When requesting a correction, please mention this item's handle: RePEc:tse:wpaper:27872. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()
If references are entirely missing, you can add them using this form.