Template-Type: ReDIF-Paper 1.0
Series: Tinbergen Institute Discussion Papers
Creation-Date: 2009-01-20
Number: 09-007/1
Author-Name: Iwan Bos
Author-Workplace-Name: University of Amsterdam
Author-Name: Maarten Pieter Schinkel
Author-Workplace-Name: University of Amsterdam
Title: Tracing the Base: A Topographic Test for Collusive Basing-Point Pricing
Abstract: Basing-point pricing is known to have been abused by geographically dispersed firms in order to eliminate competition on transportation costs. This paper develops a topographic test for collusive basing-point pricing. The method uses transaction data (prices, quantities) and customer project site locations to recover the basing-point(s) from which delivered prices were calculated. These bases are compared to the locations of the production mills in a test that discriminates between competitive and collusive basing-point pricing. We define a measure for the likelihood of collusion that can be used to screen industries that traditionally apply delivered pricing for the presence of cartels. We operationalize this screen with a software. The test is hard to beat for cartels using this otherwise elusive form of price-fixing. When a cartel was found to have abused the basing-point system, our method can be used to estimate antitrust damages.
Classification-JEL: L41, K42, C12
Keywords: basing-point pricing, cartels, detection, antitrust, damages
File-Url: https://papers.tinbergen.nl/09007.pdf
File-Format: application/pdf
File-Size: 491220 bytes
Handle: RePEc:tin:wpaper:20090007