MEASURING THE TRUE HARM FROM PRICE-FIXING TO BOTH DIRECT AND INDIRECT PURCHASERS

Legal actions by direct and indirect purchasers to recover damages from price-fixing, common in the United States for years, are now appearing in a number of other countries. Traditional measures of damages are flawed as measures of the true harm suffered and will often significantly understate that...

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Published inThe Journal of industrial economics Vol. 58; no. 4; pp. 895 - 927
Main Authors BASSO, LEONARDO J., ROSS, THOMAS W.
Format Journal Article
LanguageEnglish
Published Oxford, UK Blackwell Publishing Ltd 01.12.2010
Blackwell Publishing
Subjects
Antitrust
antitrust damages
Cartels
Competition
Competitiveness
Corporate crime
Cost functions
Damage compensation
Economic competition
Financial loss
Industrial economics
K21
L41
L42
Legal aspects
Marginal costs
pass-through
Price fixing
Prices
Prosecutorial overcharging
Publishing industry
Purchasers
Recoverable damages
Studies
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Summary:Legal actions by direct and indirect purchasers to recover damages from price-fixing, common in the United States for years, are now appearing in a number of other countries. Traditional measures of damages are flawed as measures of the true harm suffered and will often significantly understate that true harm. This paper provides measures of the degree of understatement of the true harm when traditional approaches are used and shows how the size of the error depends on the degree of competitiveness of downstream markets. The paper also provides measures of distribution of the true harm between direct and indirect purchasers.
Bibliography:ark:/67375/WNG-7DXNMK4J-L
ArticleID:JOIE437
istex:3BB854F00DEDB911A06D32970E213DA30ABCF7AA
The authors wish to acknowledge helpful discussions and/or communications with James Brander, Tim Brennan, John Connor, Martin Hellwig, Jan Tuinstra, Philip Williams, Ralph Winter and The Editor, as well as very constructive comments from two anonymous referees; the very capable research assistance of Jennifer Ng; and the financial support for this research from the Social Sciences and Humanities Research Council of Canada, the Phelps Centre for the Study of Government and Business in the Sauder School of Business and Instituto Sistemas Complejos de Ingeniería, Grants P-05-004-F y FB0816.
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The authors wish to acknowledge helpful discussions and/or communications with James Brander, Tim Brennan, John Connor, Martin Hellwig, Jan Tuinstra, Philip Williams, Ralph Winter and The Editor, as well as very constructive comments from two anonymous referees; the very capable research assistance of Jennifer Ng; and the financial support for this research from the Social Sciences and Humanities Research Council of Canada, the Phelps Centre for the Study of Government and Business in the Sauder School of Business and Instituto Sistemas Complejos de Ingeniería, Grants P‐05‐004‐F y FB0816.
ObjectType-Article-2
SourceType-Scholarly Journals-1
ObjectType-Feature-1
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ISSN:0022-1821
1467-6451
DOI:10.1111/j.1467-6451.2010.00437.x