THE POST-CARTEL EQUILIBRIUM PUZZLE IN THE GERMAN CEMENT MARKET: A REPLY TO HÜSCHELRATH, MÜLLER, and VEITH

Niels Frank and Philipp Schliffke

Journal of Competition Law and Economics, 2013, vol. 9, issue 2, 495-509

Abstract: Kai Hüschelrath, Kathrin Müller, and Tobias Veith study the German cement cartel that lasted from the beginning of the 1990s until the end of 2001.1 Using both a during-and-after and a yardstick difference-in-difference approach, they estimate cartel overcharges between 20 percent and 26.5 percent, pointing out that they have explicitly considered alternative post-cartel transition periods. We show that the authors fail to account for the most important aspect of damage estimation in that case—a punishment phase that followed the internal breakdown of the cartel. The result is an estimated overcharge that is more than twice as large as it was estimated during court proceedings. We develop a simple procedure that helps to estimate the length of the post-cartel off-equilibrium period. Using this procedure, we show that any overcharge estimation that is not considering this punishment phase is highly non-robust and yields upward biased overcharge estimates.

JEL-codes: C26 K21 L41 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:oup:jcomle:v:9:y:2013:i:2:p:495-509.

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