The Distribution of Harm in Price-Fixing Cases

Research output: Working paperDiscussion paperOther research output

Abstract

Abstract: We consider a vertically related industry and analyze how the total harm due to a price increase upstream is distributed over downstream firms and final consumers. For this purpose, we develop a general model without making specific assumptions regarding demand, costs, or the mode of competition. We consider both the case of homogeneous and differentiated goods markets. Furthermore, we discuss data requirements and suggest explicit formulas and regression specifications that can be used to estimate the relevant terms in the harm distribution in practice, even if elevated upstream prices are rather constant over time. The latter can be achieved by considering perturbations of the demand curve. This in turn can be used to construct a supply curve for the case of imperfect competition that includes perfect competition and monopoly as special cases. Finally, we illustrate how basic intuition from the tax incidence literature carries over to the distribution of harm.
Original languageEnglish
Place of PublicationTilburg
PublisherTILEC
Volume2008-030
Publication statusPublished - 2008

Publication series

NameTILEC Discussion Paper
Volume2008-030

Fingerprint

Price fixing
Industry
Perturbation
Monopoly
Intuition
Tax incidence
Demand curve
Imperfect competition
Perfect competition
Costs

Keywords

  • cartel
  • abuse of a dominant position
  • pass on defence
  • apportionment of harm
  • supply curve
  • tax incidence

Cite this

Boone, J., & Müller, W. (2008). The Distribution of Harm in Price-Fixing Cases. (TILEC Discussion Paper; Vol. 2008-030). Tilburg: TILEC.
Boone, J. ; Müller, W. / The Distribution of Harm in Price-Fixing Cases. Tilburg : TILEC, 2008. (TILEC Discussion Paper).
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Boone, J & Müller, W 2008 'The Distribution of Harm in Price-Fixing Cases' TILEC Discussion Paper, vol. 2008-030, TILEC, Tilburg.

The Distribution of Harm in Price-Fixing Cases. / Boone, J.; Müller, W.

Tilburg : TILEC, 2008. (TILEC Discussion Paper; Vol. 2008-030).

Research output: Working paperDiscussion paperOther research output

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N2 - Abstract: We consider a vertically related industry and analyze how the total harm due to a price increase upstream is distributed over downstream firms and final consumers. For this purpose, we develop a general model without making specific assumptions regarding demand, costs, or the mode of competition. We consider both the case of homogeneous and differentiated goods markets. Furthermore, we discuss data requirements and suggest explicit formulas and regression specifications that can be used to estimate the relevant terms in the harm distribution in practice, even if elevated upstream prices are rather constant over time. The latter can be achieved by considering perturbations of the demand curve. This in turn can be used to construct a supply curve for the case of imperfect competition that includes perfect competition and monopoly as special cases. Finally, we illustrate how basic intuition from the tax incidence literature carries over to the distribution of harm.

AB - Abstract: We consider a vertically related industry and analyze how the total harm due to a price increase upstream is distributed over downstream firms and final consumers. For this purpose, we develop a general model without making specific assumptions regarding demand, costs, or the mode of competition. We consider both the case of homogeneous and differentiated goods markets. Furthermore, we discuss data requirements and suggest explicit formulas and regression specifications that can be used to estimate the relevant terms in the harm distribution in practice, even if elevated upstream prices are rather constant over time. The latter can be achieved by considering perturbations of the demand curve. This in turn can be used to construct a supply curve for the case of imperfect competition that includes perfect competition and monopoly as special cases. Finally, we illustrate how basic intuition from the tax incidence literature carries over to the distribution of harm.

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Boone J, Müller W. The Distribution of Harm in Price-Fixing Cases. Tilburg: TILEC. 2008. (TILEC Discussion Paper).