Quantitative Techniques for Competition and Antitrust Analysis by Peter DavisQuantitative Techniques for Competition and Antitrust Analysis by Peter Davis

Quantitative Techniques for Competition and Antitrust Analysis

byPeter Davis

Hardcover | December 6, 2009

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This book combines practical guidance and theoretical background for analysts using empirical techniques in competition and antitrust investigations. Peter Davis and Eliana Garcés show how to integrate empirical methods, economic theory, and broad evidence about industry in order to provide high-quality, robust empirical work that is tailored to the nature and quality of data available and that can withstand expert and judicial scrutiny. Davis and Garcés describe the toolbox of empirical techniques currently available, explain how to establish the weight of pieces of empirical work, and make some new theoretical contributions.

The book consistently evaluates empirical techniques in light of the challenge faced by competition analysts and academics--to provide evidence that can stand up to the review of experts and judges. The book's integrated approach will help analysts clarify the assumptions underlying pieces of empirical work, evaluate those assumptions in light of industry knowledge, and guide future work aimed at understanding whether the assumptions are valid. Throughout, Davis and Garcés work to expand the common ground between practitioners and academics.

Peter Davisis deputy chairman of the United Kingdom's Competition Commission. He previously served on the faculties of MIT Sloan and the London School of Economics. He holds a PhD in economics from Yale University.Eliana Garcésis a member of the cabinet of the European Commissioner for Consumer Affairs. She was previously a member of t...
Title:Quantitative Techniques for Competition and Antitrust AnalysisFormat:HardcoverDimensions:592 pagesPublished:December 6, 2009Publisher:Princeton University PressLanguage:English

The following ISBNs are associated with this title:

ISBN - 10:0691142572

ISBN - 13:9780691142579


Table of Contents

Preface ix

Acknowledgments xii

Chapter 1: The Determinants of Market Outcomes 1

1.1 Demand Functions and Demand Elasticities 1

1.2 Technological Determinants of Market Structure 19

1.3 Competitive Environments: Perfect Competition, Oligopoly, and

Monopoly 37

1.4 Conclusions 61

Chapter 2: Econometrics Review 62

2.1 Multiple Regression 63

2.2 Identification of Causal Effects 89

2.3 Best Practice in Econometric Exercises 113

2.4 Conclusions 119

2.5 Annex: Introduction to the Theory of Identification 121

Chapter 3: Estimation of Cost Functions 123

3.1 Accounting and Economic Revenue, Costs, and Profits 125

3.2 Estimation of Production and Cost Functions 131

3.3 Alternative Approaches 149

3.4 Costs and Market Structure 158

3.5 Conclusions 160

Chapter 4: Market Definition 161

4.1 Basic Concepts in Market Definition 162

4.2 Price Level Differences and Price Correlations 169

4.3 Natural Experiments 185

4.4 Directly Estimating the Substitution Effect 191

4.5 Using Shipment Data for Geographic Market Definition 198

4.6 Measuring Pricing Constraints 201

4.7 Conclusions 227

Chapter 5: The Relationship between Market Structure and Price 230

5.1 Framework for Analyzing the Effect of Market Structure on Prices 231

5.2 Entry, Exit, and Pricing Power 256

5.3 Conclusions 282

Chapter 6: Identification of Conduct 284

6.1 The Role of Structural Indicators 285

6.2 Directly Identifying the Nature of Competition 300

6.3 Conclusions 341

6.4 Annex: Identification of Conduct in Differentiated Markets 343

Chapter 7: Damage Estimation 347

7.1 Quantifying Damages of a Cartel 347

7.2 Quantifying Damages in Abuse of Dominant Position Cases 377

7.3 Conclusions 380

Chapter 8: Merger Simulation 382

8.1 Best Practice in Merger Simulation 383

8.2 Introduction to Unilateral Effects 386

8.3 General Model for Merger Simulation 401

8.4 Merger Simulation: Coordinated Effects 426

8.5 Conclusions 434

Chapter 9: Demand System Estimation 436

9.1 Demand System Estimation: Models of Continuous Choice 437

9.2 Demand System Estimation: Discrete Choice Models 462

9.3 Demand Estimation in Merger Analysis 491

9.4 Conclusions 499

Chapter 10: Quantitative Assessment of Vertical Restraints and Integration 502

10.1 Rationales for Vertical Restraints and Integration 503

10.2 Measuring the Effect of Vertical Restraints 518

10.3 Conclusions 553

Conclusion 555

References 557

Index 577

Editorial Reviews

"This very useful book is a great addition to the discipline. Applied industrial organization is a rapidly developing field, with many open areas and problems, but practitioners are often forced to work with what is available to make antitrust decisions. A good user's manual like this one is important to have. I am sure practitioners will find this a handy toolbox."-Maarten Pieter Schinkel, University of Amsterdam