Antitrust & Competition Policy Blog

Editor: D. Daniel Sokol
University of Florida
Levin College of Law

Thursday, July 11, 2019

Estimating the Pass-On Effect in Antitrust Damage Cases: Relative Strengths and Weaknesses of the ‘Comparator’ Method vs. the ‘Pass-On Rate’ Method

Miguel de la Mano, Compass Lexecon and Christopher Milde, Compass Lexecon are Estimating the Pass-On Effect in Antitrust Damage Cases: Relative Strengths and Weaknesses of the ‘Comparator’ Method vs. the ‘Pass-On Rate’ Method.

ABSTRACT: In this paper we compare the assumptions and information requirements of two common methods to pass-on effect estimation for the calculation of damages in cartel or abuse of dominance cases: the comparator and the pass-on rate methods. We note that the comparator method is feasible in some situations in which the pass-on rate method is not. Moreover, the comparator method may require fewer assumptions on the true (but unobservable) price mechanism. Where both methods are feasible, however, the pass-on rate method arguably requires less data and likely fewer control variables. Therefore, depending on the specific circumstances in a given case and the availability of data, each method has different strengths and weaknesses. A general preference for the comparator method as stated in the EU draft guidelines on pass-on estimation is thus not justified. To the contrary, in some arguably standard situations the lower data and control variable requirements of the pass-on rate method may imply that it is preferable to the comparator method.

https://lawprofessors.typepad.com/antitrustprof_blog/2019/07/estimating-the-pass-on-effect-in-antitrust-damage-cases-relative-strengths-and-weaknesses-of-the-com.html

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