Friday, July 27, 2012
Posted by D. Daniel Sokol
Kai Huschelrath, Centre for European Economic Research (ZEW), Kathrin Mueller, Centre for European Economic Research (ZEW) and Tobias Veith, Centre for European Economic Research (ZEW) describe Concrete Shoes for Competition - The Effect of the German Cement Cartel on Market Price.
ABSTRACT: We use publicly available price data from the German cement industry to estimate the cartel-induced price increase. We apply two different comparator-based approaches – the ‘before-and-after’ approach and the ‘difference-in-differences’ approach – and especially study the impact of various assumptions on the transition period from the cartel period to the non-cartel period on the overcharge estimate. We find that the cement cartel led to price overcharges in a range from 20.3 to 26.5 percent depending on model approach and model assumptions.