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Post-Cartel Pricing during Litigation

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  • Joseph E Harrington Jr

Abstract

Standard methods in the U.S. for calculating antitrust damages in price-fixing cases is shown to create a strategic incentive for firms to price above the non-collusive price after the cartel has dissolved. This results in an overestimate of the but for price and an underestimate of the level of damages. The extent of this upward bias in the but for price is greater, the longer the cartel was in place and the more concentrated is the industry.

Suggested Citation

  • Joseph E Harrington Jr, 2002. "Post-Cartel Pricing during Litigation," Economics Working Paper Archive 488, The Johns Hopkins University,Department of Economics, revised Jun 2003.
    • Handle: RePEc:jhu:papers:488
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    File URL: http://www.econ2.jhu.edu/REPEC/papers/WP488_harrington.pdf
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    References listed on IDEAS

    as
    1. Connor, John M., 1997. "Archer Daniels Midland: Price Fixer To The World," Staff Papers 28653, Purdue University, Department of Agricultural Economics.
    2. Connor, John M., 1998. "What Can We Learn From The Adm Global Price Conspiracies?," Staff Papers 28621, Purdue University, Department of Agricultural Economics.
    3. Bryant, Peter G & Eckard, E Woodrow, Jr, 1991. "Price Fixing: The Probability of Getting Caught," The Review of Economics and Statistics, MIT Press, vol. 73(3), pages 531-536, August.
    4. Chaim Fershtman & Ariel Pakes, 2000. "A Dynamic Oligopoly with Collusion and Price Wars," RAND Journal of Economics, The RAND Corporation, vol. 31(2), pages 207-236, Summer.
    5. Fershtman, C. & Pakes, A., 1999. "A Dynamic Oligopoly with Collusion and Price Wars," Other publications TiSEM 267a33b7-1821-400b-8cc1-9, Tilburg University, School of Economics and Management.
    6. Lawrence White, 2001. "Lysine and Price Fixing: How Long? How Severe?," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 18(1), pages 23-31, February.
    7. Robert H. Porter & J. Douglas Zona, 1999. "Ohio School Milk Markets: An Analysis of Bidding," RAND Journal of Economics, The RAND Corporation, vol. 30(2), pages 263-288, Summer.
    8. John Connor, 2001. "“Our Customers Are Our Enemies”: The Lysine Cartel of 1992–1995," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 18(1), pages 5-21, February.
    9. Xavier Vives, 2001. "Oligopoly Pricing: Old Ideas and New Tools," MIT Press Books, The MIT Press, edition 1, volume 1, number 026272040x, December.
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