How Much Do Cartel Overcharges

Abstract

Connor and Lande (2008) conducted a survey of cartels and found a mean overcharge estimate in the range of 31% to 49%. By examining more sources, Connor (2010) finds a mean of 50.4% for successful cartels. However, the data that are used in those studies are estimates that are obtained from different methodologies, sources, and contexts rather than from direct observation. We conduct a meta-analysis of cartel overcharge estimates that provides a sound treatment of these matters and other data problems. We find a bias-corrected mean and median overcharge estimate of 15.47% and 16.01%. Our results have significant antitrust policy implications.

Keywords: Cartels, overcharges