Post by Sapphire Capital on Sept 27, 2008 0:37:53 GMT 4
The Distribution of Harm in Price-Fixing Cases
Jan Boone
Tilburg University - Center for Economic Research; Centre for Economic Policy Research (CEPR); Institute for the Study of Labor (IZA)
Wieland Müller
Tilburg University - Center and Faculty of Economics and Business Administration
August 15, 2008
CentER Discussion Paper Series No. 2008-68
TILEC Discussion Paper No. 2008-030
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.
papers.ssrn.com/sol3/Delivery.cfm/SSRN_ID1262173_code847251.pdf?abstractid=1262173&mirid=2
Jan Boone
Tilburg University - Center for Economic Research; Centre for Economic Policy Research (CEPR); Institute for the Study of Labor (IZA)
Wieland Müller
Tilburg University - Center and Faculty of Economics and Business Administration
August 15, 2008
CentER Discussion Paper Series No. 2008-68
TILEC Discussion Paper No. 2008-030
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.
papers.ssrn.com/sol3/Delivery.cfm/SSRN_ID1262173_code847251.pdf?abstractid=1262173&mirid=2