Factors Influencing the Magnitude of Cartel Overcharges: an Empirical Analysis of Food Industry Cartels

Using the overcharge estimates for 395 cartel episodes, we evaluate econometrically the impact of different cartels characteristics on the size of overcharges imposed by cartels on different geographic markets and during different antitrust law regimes starting from the 18 century. We analyze the overcharges imposed by food industry cartels relative to those imposed by other industry cartels. The results of our study have important policy implications. We find that the average overcharge imposed by cartels in our sample is 29 percent with a median of 19 percent. Food industry cartels impose lower overcharges than cartels in other industries. International cartels impose higher overcharges than domestic cartels. Longer cartel episodes generate higher levels of overcharges. Bid-rigging cartels impose approximately the same levels of overcharges than other cartels.