Factors Influencing the Magnitude of Cartel Overcharges:. An Empirical Analysis of the US Market

Posted by D. Daniel Sokol

Yuliya Bolotova (University of Idaho Agricultural Economics and Rural Sociology), John Connor (Purdue University Agricultural and Applied Economics), and Douglas J. Miller (University of Missouri Economics) have developed some insights on Factors Influencing the Magnitude of Cartel Overcharges:. An Empirical Analysis of the US Market.

ABSTRACT: Using the overcharge estimates for 333 cartel episodes, we evaluate the effect of cartel characteristics and changes in the market and legal environment on the magnitude of overcharges imposed by private cartels in the United States and other geographic markets as early as the eighteenth century. The median overcharge attained by cartels represented in our sample is 18 percent of selling price. International cartels imposed higher overcharges than domestic cartels. Longer cartel episodes generated higher overcharges. Overcharges achieved in the United States and European markets were lower than overcharges imposed in the Asian markets and in the rest of the world. Overcharges tended to decline as antitrust enforcement became stricter. Higher overcharges were associated with markets where cartels had high market shares and with markets characterized by high levels of fixed costs.