Cartel Damages Claims, Passing-On, and Passing-Back

Luke Garrod, Tien- Der Han (), James Harvey () and Matthew Olczak ()
Additional contact information
Tien- Der Han: Loughborough University
James Harvey: Economic Insight Ltd.
Matthew Olczak: Aston University

Review of Industrial Organization, 2025, vol. 66, issue 3, No 1, 292 pages

Abstract: Abstract Firms can mitigate the harm of an input cartel by passing on some of the higher cost to their customers by raising their own prices. Recent damages claims have highlighted that firms may also respond by reducing the prices that are paid to their suppliers of complementary inputs; the firm thereby passes back some harm upstream. To provide guidance for practitioners as to how such effects together affect the division of the harm, we derive the equilibrium ‘passing-on’ and ‘passing-back’ effects in a successive oligopolies model where one of two inputs is cartelised. We show that the passing-back effect is larger when there is greater market power in the complementary input sector. This reduces the passing-on effect. The complementary input suppliers can incur substantial harm, and the harm that is inflicted on the cartel’s direct and/or indirect purchasers can thereby be reduced.

Keywords: Damages; Cartel overcharge; Cost pass-through; Vertically related markets (search for similar items in EconPapers)
JEL-codes: D43 K21 L13 L40 (search for similar items in EconPapers)
Date: 2025
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Working Paper: Cartel Damages Claims, Passing-On and Passing-Back (2023)
Working Paper: Cartel Damages Claims, Passing-On and Passing-Back (2023)
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DOI: 10.1007/s11151-024-09991-9

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