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Journal of Competition Law and Economics Advance Access originally published online on August 28, 2008
Journal of Competition Law and Economics 2009 5(2):361-381; doi:10.1093/joclec/nhn025
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© The Author (2008). Published by Oxford University Press. All rights reserved. For Permissions, please email: journals.permissions@oxfordjournals.org

FACTORS INFLUENCING THE MAGNITUDE OF CARTEL OVERCHARGES: AN EMPIRICAL ANALYSIS OF THE U.S. MARKET

Yuliya Bolotova *, John M. Connor ** and Douglas J. Miller {dagger}

Correspondence: E-mail: yuliyab{at}uidaho.edu

JEL: K21, L10

Using the overcharge estimates for 333 cartel episodes, we evaluate the effect of cartel characteristics and changes in the market and legal environment on the magnitude of overcharges imposed by private cartels in the United States and other geographic markets as early as the eighteenth century. The median overcharge attained by cartels represented in our sample is 18 percent of selling price. International cartels imposed higher overcharges than domestic cartels. Longer cartel episodes generated higher overcharges. Overcharges achieved in the United States and European markets were lower than overcharges imposed in the Asian markets and in the rest of the world. Overcharges tended to decline as antitrust enforcement became stricter. Higher overcharges were associated with markets where cartels had high market shares and with markets characterized by high levels of fixed costs.

* Assistant Professor, Department of Agricultural Economics and Rural Sociology, University of Idaho, Moscow, ID 83844-2337, USA.

** Professor, Department of Agricultural Economics, Purdue University, West Lafayette, IN 47907-2056, USA. E-mail: jconnor{at}purdue.edu. Purdue ARP number: 2008-18367.

{dagger} Associate Professor, Department of Economics, University of Missouri, Columbia, MO 65211-6040, USA. E-mail: millerdou{at}missouri.edu. Research for this paper was supported in part by the Edmund S. Muskie Ph.D. Fellowship Program, a program of the Bureau of Educational and Cultural Affairs (ECA), U.S. Department of State, administered by the American Councils for International Education (ACTR/ACCELS). The opinions expressed in the paper are those of the authors and do not necessarily express the views of either ECA or the American Councils.


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