Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/87086
Authors: 
Bos, Iwan
Schinkel, Maarten Pieter
Year of Publication: 
2009
Series/Report no.: 
Tinbergen Institute Discussion Paper 09-007/1
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.
Subjects: 
basing-point pricing
cartels
detection
antitrust
damages
JEL: 
L41
K42
C12
Document Type: 
Working Paper

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