Saturday, May 5, 2007
Posted by D. Daniel Sokol
Cartel enforcement is one of the most interesting area of antitrust. How do we measure cartel overcharges? James F. Nieberding of LECG offers a number of different methods in his paper Estimating Overcharges in Antitrust Cases Using a Reduced-Form Approach: Methods and Issues.
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 longterm dynamics.