Bounds on the damages from a price overcharge

Sander Heinsalu

Economics Bulletin, 2023, vol. 43, issue 3, 1265 - 1270

Abstract: In antitrust cases where the defendant, whether it's a cartel or a dominant supplier, overcharges a firm, the defendant typically makes three claims: (1) the firm passed on the higher price to its customers, (2) its sales volume did not decrease materially, and (3) the damages are small. To calculate the damages, these cases usually estimate the price pass-on and sometimes consider the volume decrease. This study establishes direct bounds on the damages using minimal data: the sales figures with and without the overcharge, along with the exact amount of the overcharge. These bounds reduce the risk of over- or under-compensation and offer a sense-check on any alternative estimates of the damages.

Keywords: pass-on; volume effect; private damages; cartel overcharge; abuse of dominance (search for similar items in EconPapers)
JEL-codes: L2 L4 (search for similar items in EconPapers)
Date: 2023-09-30
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