Estimating cartel damages with model averaging approaches

Wen-Jen Tsay

International Review of Law and Economics, 2021, vol. 68, issue C

Abstract: This research offers an easy-to-implement forecast combination procedure to deal with issues of model uncertainty when evaluating cartel damages. We combine the Mallows model averaging (MMA) method with both the dummy variable (DV) and forecasting approaches to investigate the famous citric acid cartel case during the 1990s. The path of but-for prices generated from the MMA method with DV specification lies in-between those generated from the forecasting and DV methods, supporting the theoretical properties of the MMA method that weights over different forecasts generated from various candidate models. The findings indicate that the but-for prices generated from the MMA method could serve as a useful robustness check for cartel damage estimations.

Keywords: Cartel; Antitrust; Damage estimation (search for similar items in EconPapers)
JEL-codes: C10 L12 L41 (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:eee:irlaec:v:68:y:2021:i:c:s0144818821000430

DOI: 10.1016/j.irle.2021.106019

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