EconPapers    
Economics at your fingertips  
 

Identifying Participants in a Price-fixing Conspiracy: Output and Market Share Tests Reexamined

Mehmet Karaaslan ()

Law and Economics from University Library of Munich, Germany

Abstract: : If there is a cartel agreement among a subset of firms in an industry, it should be predicted that all firms in that industry will increase prices. Nevertheless, industry prices alone should not indicate that a particular firm is guilty of that conspiracy. According to the output test and its market share variant if the output or the market share of the firm that claims to be innocent in the collusive activity rises in response to the price increase, that firm's claim should be accepted as true. Using a collusive variant of the dominant firm model, this paper shows that these are not robust tests to reveal innocence or guilt, and characterizes cases where they may pardon a guilty firm (Type I error) or indict an innocent firm (Type II error). This paper also shows that a market share test can not be used to prove a dominant firm's intent for predatory pricing JEL Classification: G18, L41, K42 Keywords: Dominant firm, collusion, predatory pricing, output test, market share test, antitrust

JEL-codes: K (search for similar items in EconPapers)
Date: 1995-03-24
Note: Mac/Word 5.1 document, encoded BinHex using StuffIt 1.5 Mac Utility, 18 pages, Figure 1 not included. To request the figure, send e-mail to karaasla@bigvax.alfred.edu with your fax number.
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link)
https://econwpa.ub.uni-muenchen.de/econ-wp/le/papers/9503/9503001.pdf (application/pdf)
https://econwpa.ub.uni-muenchen.de/econ-wp/le/papers/9503/9503001.ps.gz (application/postscript)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wpa:wuwple:9503001

Access Statistics for this paper

More papers in Law and Economics from University Library of Munich, Germany
Bibliographic data for series maintained by EconWPA ().

 
Page updated 2019-08-31
Handle: RePEc:wpa:wuwple:9503001