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Estimating cartel damages with model averaging approaches

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  • Tsay, Wen-Jen

Abstract

This research offers an easy-to-implement forecast combination procedure to deal with issues of model uncertainty when evaluating cartel damages. We combine the Mallows model averaging (MMA) method with both the dummy variable (DV) and forecasting approaches to investigate the famous citric acid cartel case during the 1990s. The path of but-for prices generated from the MMA method with DV specification lies in-between those generated from the forecasting and DV methods, supporting the theoretical properties of the MMA method that weights over different forecasts generated from various candidate models. The findings indicate that the but-for prices generated from the MMA method could serve as a useful robustness check for cartel damage estimations.

Suggested Citation

  • Tsay, Wen-Jen, 2021. "Estimating cartel damages with model averaging approaches," International Review of Law and Economics, Elsevier, vol. 68(C).
    • Handle: RePEc:eee:irlaec:v:68:y:2021:i:c:s0144818821000430
    DOI: 10.1016/j.irle.2021.106019
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    More about this item

    Keywords

    Cartel; Antitrust; Damage estimation;
    All these keywords.

    JEL classification:

    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
    • C10 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - General

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