The Difference-in-Differences Approach in the Estimation of Cartel Damage

CPI Antitrust Chronicle, Spring 2019, Volume 3, Number 1

8 Pages Posted: 19 Jun 2019

See all articles by Frank P. Maier-Rigaud

Frank P. Maier-Rigaud

ABC economics; IESEG School of Management (LEM-CNRS), Department of Economics and Quantitative Methods

Slobodan Sudaric

NERA Economic Consulting

Date Written: June 04, 2019

Abstract

A crucial step in the quantification of damage in the context of damages claims is the estimation of the counterfactual price level: the price level that would have been observed in the absence of the cartel. This article discusses the Difference-in-Differences (“DiD”) estimation procedure for the estimation of counterfactual prices. While DiD is a very powerful estimation method, it is demanding in terms of conditions that need to be satisfied to allow a proper application, notably the common trend assumption. The aim of this article is to introduce the DiD approach, the underlying common trend assumption, and to draw implications for its use in the quantification of damage.

Keywords: Difference-in-differences, damage, quantification, competition, antitrust, econometric methods

JEL Classification: C21, K21, L41

Suggested Citation

Maier-Rigaud, Frank P. and Sudaric, Slobodan, The Difference-in-Differences Approach in the Estimation of Cartel Damage (June 04, 2019). CPI Antitrust Chronicle, Spring 2019, Volume 3, Number 1, Available at SSRN: https://ssrn.com/abstract=3402439

Frank P. Maier-Rigaud

ABC economics ( email )

Berlin, 10115
Germany
10115 (Fax)

HOME PAGE: http://www.ABCecon.com

IESEG School of Management (LEM-CNRS), Department of Economics and Quantitative Methods ( email )

Socle de la Grande Arche
1 Parvis de la Défense
Paris, La Défense Cedex, 92044
France

Slobodan Sudaric (Contact Author)

NERA Economic Consulting ( email )

Unter den Linden 14
Berlin, 10117
Germany

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