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How Much Do Cartel Overcharge?

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  • Marcel Boyer
  • Rachidi Kotchoni

Abstract

Connor and Lande (Issues in competition law and policy, pp 2203–2218, 2008 ) conducted a survey of cartels and found a mean overcharge estimate in the range of 31–49 %. By examining more sources, Connor (Price-fixing overcharges, 2nd edn. http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1610262 , 2010 ) finds a mean of 50.4 % for successful cartels. However, the data that are used in those studies are estimates that are obtained from different methodologies, sources, and contexts rather than from direct observation. We conduct a meta-analysis of cartel overcharge estimates that provides a sound treatment of these matters and other data problems. We find a bias-corrected mean and median overcharge estimate of 15.47 and 16.01 %. Our results have significant antitrust policy implications. Copyright Springer Science+Business Media New York 2015

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  • Marcel Boyer & Rachidi Kotchoni, 2015. "How Much Do Cartel Overcharge?," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 47(2), pages 119-153, September.
    • Handle: RePEc:kap:revind:v:47:y:2015:i:2:p:119-153
    DOI: 10.1007/s11151-015-9472-1
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    1. John M. Connor & Robert H. Lande, 2017. "Comment on “The Empirical Basis for Antitrust: Cartels, Mergers, and Remedies”," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 24(3), pages 329-338, September.
    2. Marcel Boyer & Thomas W. Ross & Ralph A. Winter, 2017. "The rise of economics in competition policy: A Canadian perspective," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 50(5), pages 1489-1524, December.
    3. Georg Clemens & Holger A. Rau, 2019. "Do discriminatory leniency policies fight hard‐core cartels?," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 28(2), pages 336-354, April.
    4. George Symeonidis, 2024. "Unprofitable Cartels: Evidence from a Natural Experiment in the UK," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 64(3), pages 421-447, May.
    5. Allain, Marie-Laure & Boyer, Marcel & Kotchoni, Rachidi & Ponssard, Jean-Pierre, 2015. "Are cartel fines optimal? Theory and evidence from the European Union," International Review of Law and Economics, Elsevier, vol. 42(C), pages 38-47.
    6. Tanja Artiga González & Markus Schmid & David Yermack, 2019. "Does Price Fixing Benefit Corporate Managers?," Management Science, INFORMS, vol. 65(10), pages 4813-4840, October.
    7. Marcel Boyer & Anne Catherine Faye & Rachidi Kotchoni, 2017. "Challenges and Pitfalls in Cartel Policy and Fining," CIRANO Working Papers 2017s-20, CIRANO.
    8. Bos, Iwan & Davies, Stephen & Harrington, Joseph E. & Ormosi, Peter L., 2018. "Does enforcement deter cartels? A tale of two tails," International Journal of Industrial Organization, Elsevier, vol. 59(C), pages 372-405.
    9. Marcel Boyer, 2021. "The Retail Gasoline Price-Fixing Cartel in Québec," CIRANO Working Papers 2021s-06, CIRANO.
    10. Symeonidis, George, 2018. "Collusion, profitability and welfare: Theory and evidence," Journal of Economic Behavior & Organization, Elsevier, vol. 145(C), pages 530-545.
    11. World Bank Group, 2016. "South Africa Economic Update, February 2016," World Bank Publications - Reports 23762, The World Bank Group.
    12. Yannis Katsoulacos & Evgenia Motchenkova & David Ulph, 2020. "Penalising on the Basis of the Severity of the Offence: A Sophisticated Revenue-Based Cartel Penalty," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 57(3), pages 627-646, November.
    13. Katsoulacos, Yannis & Motchenkova, Evgenia & Ulph, David, 2015. "Penalizing cartels: The case for basing penalties on price overcharge," International Journal of Industrial Organization, Elsevier, vol. 42(C), pages 70-80.
    14. Matthias Firgo & Agnes Kügler, 2014. "Auswirkung der Verbundbildung auf die Preise in österreichischen Skigebieten," WIFO Monatsberichte (monthly reports), WIFO, vol. 87(12), pages 851-862, December.
    15. Marcel Boyer & Anne Catherine Faye & Éric Gravel & Rachidi Kotchoni, 2019. "Guiding Principles in Setting Cartel Sanctions (The Working Paper Version)," CIRANO Working Papers 2019s-18, CIRANO.
    16. Holler, Emanuel & Rickert, Dennis, 2022. "How resale price maintenance and loss leading affect upstream cartel stability: Anatomy of a coffee cartel," International Journal of Industrial Organization, Elsevier, vol. 85(C).
    17. Stephen Davies & Franco Mariuzzo & Peter L. Ormosi, 2018. "Quantifying The Deterrent Effect Of Anticartel Enforcement," Economic Inquiry, Western Economic Association International, vol. 56(4), pages 1933-1949, October.
    18. Ran Jing & Jiong Gong & Fang Yi, 2020. "Antitrust Fines: Experiences from China," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 57(1), pages 167-187, August.
    19. Flavien Moreau & Ludovic Panon, 2023. "How costly are cartels?," Temi di discussione (Economic working papers) 1413, Bank of Italy, Economic Research and International Relations Area.
    20. Ricardo Carvalho Lima & Guilherme Mendes Resende, 2021. "Using the Moran’s I to detect bid rigging in Brazilian procurement auctions," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 66(2), pages 237-254, April.
    21. W. Benedikt Schmal, 2022. "From Rules to Regs: A Structural Topic Model of Collusion Research," Papers 2210.02957, arXiv.org.
    22. Marcel Boyer & Rachidi Kotchoni, 2015. "How Much Do Cartel Overcharge? (The "Working Paper" Version)," CIRANO Working Papers 2015s-37, CIRANO.

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