Yuliya Bolotova

Cartel Overcharges: Survey and Meta-Analysis

The article presents a unique regression analysis of social-science estimates of the size of cartel overcharges. More than 800 overcharge rates were collected from a variety of published sources that have appeared in the literature during the last 125 years. A meta-analysis of overcharges from 395 cartel episodes finds that duration, legal environment, and organizational characteristics of cartels explain the variation on overcharge rates to a greater extent than the type of publication or the method of overcharge analysis. In particular, overcharges are significantly higher for durable international cartels and are declining as antitrust enforcement regimes have stiffened. Historical case studies and government reports calculate lower overcharges, whereas antitrust authorities arrive at relatively high rates.

Cartel overcharges: An empirical analysis

Using 406 overcharge estimates, the study analyzes the impact of cartel characteristics and the market environment on the magnitude of overcharges attained by cartels in different geographic markets and during six antitrust law regimes starting from the 18th century. The median overcharge achieved by cartels is 20 percent of selling price. As predicted by cartel theory, market structure is an important determinant of the overcharge level. Markets where cartels have high market shares tend to have higher overcharges. The number of cartel participants and the size inequality among them are inversely related to the overcharge level. International cartels impose higher overcharges than domestic cartels. Overcharges attained in the US and European markets tend to be lower than overcharges achieved in the Asian markets and the rest of the world. Results on the impact of changes in the antitrust law environment over time on the size of cartel overcharges are mixed. However, there is some evidence indicating that the lowest overcharges are associated with the latest antitrust law period.

The Impact of the New York State Milk Price Gouging Law on the Price-Transmission Process and Supermarket Pricing Strategies in the Fluid Whole Milk Market

The paper analyzes the effect of the New York State Milk Price Gouging Law 200% rule (June 1991-October 2008) on the nature of price-transmission process and supermarket pricing strategies in the fluid whole milk market. This rule established that the retail prices of fluid milk products were not to exceed 200% of the Class I fluid milk prices that milk processors paid to dairy farmers. The enforcement of this law significantly affected the nature of the Class I fluid milk price transmission process and the whole milk pricing strategies of supermarkets in the five largest cities in New York State: New York City, Albany, Syracuse, Buffalo and Rochester. During the pre-law period, supermarkets used the retail price-stabilization strategy; a presence of the asymmetric Class I fluid milk price transmission process was evidence of this type of pricing strategy. In contrast, supermarkets used the retail profit stabilization strategy during the law period, which was reflected in the symmetric response of retail prices and marketing margins to increases and decreases in the Class I fluid milk prices. The analyzed design of retail milk price control actually created an institutional environment that facilitated cooperative conduct of supermarkets acting in an oligopolistic market environment, which caused a shift away from the retail price stabilization strategy in the pre-law period to the retail profit stabilization strategy in the law period.

Statistical Analysis of the Laboratory Methods Used to Detect Potato Virus Y

According to the rules of certification for seed potatoes in Idaho, the maximum allowed content of potato virus Y (PVY) in seed potatoes is 2%. A number of laboratory methods are available to test for the presence of PVY. These methods are likely to have different degrees of accuracy. Consequently, the choice of a method used to detect PVY is likely to affect the test outcome and therefore economic benefits received by seed potato growers. This paper presents a statistical analysis of PVY detection performance of a traditional ELISA-based method versus two new PCR-based methods. The latter are considered to possess superior characteristics as compared to ELISA. We find that PVY detection performance of one of the PCR-based methods is statistically different from PVY detection performance of ELISA. Furthermore, this PCR-based method is less likely to provide a PVY positive outcome. However, PVY detection performance of another PCR-based method is not statistically different from ELISA. Finally, we find that a type of sample material tested affects PVY detection outcome. A positive PVY outcome is less likely if potato tubers are tested and it is more likely if potato leaves are tested.ResumenEn Idaho, de acuerdo con las reglas de certificación para semilla de papa, el contenido máximo permitido de virus Y (PVY) en semilla es 2%. Existen varios métodos de laboratorio para probar la presencia de PVY. Estos métodos pueden tener distintos grados de precisión. En consecuencia la elección de un método para detectar PVY puede afectar el resultado de la prueba y por lo tanto los beneficios recibidos por los cultivadores de semilla de papa. Este artículo presenta un análisis estadístico del rendimiento de detección de PVY de un método tradicional basado en ELISA versus dos métodos nuevos basados en PCR. Los últimos son considerados que tienen características superiores en comparación a la prueba de ELISA. Encontramos que el rendimiento de detección de PVY de uno de los métodos basados en PCR es estadísticamente diferente de lo encontrado en la detección de PVY por ELISA. Más aún, este método basado en PCR parece proporcionar menores resultados positivos para PVY. Sin embargo, el rendimiento de detección de PVY con el otro método basado en PCR no es estadísticamente diferente al de ELISA. Finalmente, encontramos que un tipo de material probado afecta el resultado de la detección. Un resultado positivo para PVY es menos probable en tubérculos de papa y es más probable cuando hojas de la planta de papa son probadas.

Does the Potato Supply Management Program Work? A Case of the Idaho Potato Industry

High fresh potato price volatility, over-production of fresh potatoes and potato prices below the potato production costs led to a decision of a group of Idaho potato growers to organize the United Potato Growers of Idaho, a marketing cooperative. The potato supply management program was developed to stabilize the supply of fresh potatoes in Idaho in order to provide a fair level of returns to Idaho potato growers. Based on theoretical models and empirical findings presented in the paper, the effective implementation of this program was likely to contribute to an increase in the Lerner Index of market power of the Idaho potato industry from 0.4% in 2004 to 11.3% in 2005.

Cartel Sanctions: An Empirical Analysis

Using a sample of modern international cartels, we analyze the level and determinants of cartel sanctions imposed on the participants of these cartels in a number of antitrust jurisdictions. There is empirical evidence suggesting that gains from collusive conduct outweigh its costs represented by cartel sanctions. While the average (median) overcharge characterizing the analyzed sample is 27.8% (27.0%) of affected sales, the average (median) cartel fine is 10.2% (2.1%) of the volume of affected commerce. When compensations recovered by private parties are taken into account, the average cartel sanction is 18.9% (4.9%) of affected sales. Furthermore, we find a negative statistically significant relationship between the level of cartel sanctions and the overcharge level and we find a positive statistically significant relationship between the level of cartel sanctions and the volume of affected sales. This may suggest that currently cartel sanctions tend to be based on the volume of affected sales rather than on the overcharge level (i.e. damage).

Cartel Stability: An Empirical Analysis

Using the data on 238 cartelized markets we evaluate econometrically the impact of cartel characteristics as well the market and legal environment of cartel operation on cartel stability. The latter is measured as the expected number of repeated attempts to form a cartel in the same product market. We analyze the behavior of guilty (sanctioned) cartels relative to legal cartels. We find that global cartels are less stable than local cartels. Cartels operating in the countries with developed antitrust law are more stable than cartels operating in the countries without similar regulation. As antitrust law regimes become stricter, sanctioned cartels become less stable. If the average duration of cartel episode is relatively short, the cartel is more likely to make another attempt to collude. If a cartel manages to impose a relatively high level of overcharge, the cartel is less likely to repeat collusive conduct.

An Empirical Analysis of Pricing in the United States Cheese Industry: 2000-2010

The U.S. cheese industry has historically used the organized Exchange spot cheese prices as reference prices in contract cheese market. Furthermore, the Exchange cheese prices have been influencing government-set prices of milk used in cheese manufacturing (i.e. Class III milk). The thinness of the Exchange spot cheese market has been raising concerns as to whether it adequately represents the cheese market fundamentals, which is important for the effective performance of cheese industry. The empirical evidence presented in the paper may suggest that due to the nature of cheese manufacturing, which basically depends on one input (milk), and a presence of government milk pricing, Class III milk price has become a key strategic variable in the modern cheese industry. While variation in cheese production and stock explains 4-15% of variation in the Exchange cheddar cheese price, variation in lagged Class III milk price explains 72% of variation in the Exchange cheddar cheese price. Furthermore, the effect of lagged Class III milk price on the Exchange cheddar cheese price and its variance tends to be stronger than the effect of cheese production and stock.

Is Stabilization of Potato Price and Supply Effective? Empirical Evidence from Idaho

High potato price volatility, decreasing demand for fresh potatoes and prices below the cost of production led to a decision of a number of Idaho potato growers to organize the United Fresh Potato Growers of Idaho, a marketing cooperative. The programs and strategies of the cooperative target both production and marketing of fresh potatoes. To evaluate the effectiveness of the programs implemented by the cooperative, we examine the level and volatility of fresh potato prices during two periods: before the cooperative was organized and when the cooperative is in the market. We find empirical evidence suggesting that fresh potato prices were higher and less volatile during the period when the cooperative was in the market.

The Effect of the New York State Milk Price Gouging Law on the Performance of Fluid Whole Milk Market: An Empirical Analysis

The paper analyses the effect of the NYS Milk Price Gouging Law 200% rule (June 1991-October 2008) on the behavior of retail prices and marketing margins of fluid whole milk products sold in the largest New York State cities (New York City, Albany, Syracuse, Buffalo and Rochester). This rule established that retail prices of fluid milk products were not to exceed 200% of Class I fluid milk prices that milk processors paid for raw milk to dairy farmers. The law was enforced by the NYS Department of Agriculture and Markets (NYSDAM) by announcing the maximum retail price thresholds on a monthly basis. The empirical evidence presented in the paper may suggest that this particular design of retail milk price control, in conjunction with publicly announced government-set Class I fluid milk prices, actually created an institutional environment that facilitated interdependent conduct of supermarkets operating in the oligopolistic market environment. Retail prices, marketing margins and the estimated supermarket profit tend to be higher during the law period as compared to the pre-law period. Supermarkets were pricing at the NYSDAM maximum retail price threshold level, if it was profitable for them. This was the case of fluid whole milk sold in half-gallon containers in all analyzed cities and fluid whole milk sold in gallon containers in New York City.