What is an overcharge in economic terms?
Q: What is an overcharge in economic terms?
A: An overcharge is the difference between what a buyer or seller actually paid for a good due to a price-fixing cartel and what they would have paid in the absence of the cartel.
Q: What is the major component of damages that can be recovered by plaintiffs in private antitrust suits?
A: The total amount of the overcharges paid by customers of a cartel is the major component of damages that can be recovered by plaintiffs in private antitrust suits.
Q: What are buyers entitled to under U.S. federal antitrust law in cases of cartel overcharges?
A: Buyers injured by cartel overcharges are entitled to triple the overcharges they are able to prove in court, under U.S. federal antitrust law.
Q: What is the Lerner Index?
A: The Lerner Index is the most common measure of market power in economics, with a numerator of (PM - PC) where PM is the observed market price and PC is the competitive benchmark price, and a denominator of (PM).
Q: What is the overcharge ratio?
A: The overcharge ratio is a measure of market power in economics, with a numerator of (PM - PC) where PM is the observed market price and PC is the competitive benchmark price, and a denominator of (PC).
Q: When is a market considered to be perfectly competitive or when a cartel is ineffective in raising prices?
A: When a market is perfectly competitive or when a cartel is ineffective in raising prices, both the Lerner Index and overcharge ratio are zero.
Q: What is the upper limit of the Lerner Index?
A: The upper limit of the Lerner Index is one, which occurs when the pure monopoly price is charged in a market. The overcharge has no upper limit.
