Friday, August 21, 2015

The Fallacy of Inferring Collusion from Countercyclical Prices

Dov Rothman (Analysis Group) and Aaron Yeater (Analysis Group) have a new paper on The Fallacy of Inferring Collusion from Countercyclical Prices.

ABSTRACT: In cartel matters, plaintiffs often claim that higher prices during periods of weak demand is evidence of collusion. In a recent article, "The Fallacy of Inferring Collusion from Countercyclical Prices" (American Bar Association Section of Antitrust Law, The Economics Committee Newsletter, Spring 2015), Analysis Group Vice Presidents Dov Rothman and Aaron Yeater explain that this claim is based on an oversimplified economic framework. In actual markets, prices may go up or down when demand changes. An important implication is that one cannot infer collusion from the mere observation of higher prices during periods of weak demand.

https://lawprofessors.typepad.com/antitrustprof_blog/2015/08/the-fallacy-of-inferring-collusion-from-countercyclical-prices.html

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