Book Review: Econometrics—Legal, Practical, and Technical Issues

• DOI: 10.1177/0003603X16657214
• Published date: 01 September 2016
• Author: Ai Deng
• Date: 01 September 2016
• Subject Matter: Book Review

Book Review
The Antitrust Bulletin
2016, Vol. 61(3) 461-466
Book Review
ª The Author(s) 2016
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Lawrence Wu (ed.) (2014). Econometrics—Legal, Practical, and Technical Issues.
2nd ed. American Bar Association, Section of Antitrust Law. 444 pp. $199.
Reviewed by: Ai Deng, Principal, Bates White LLC; Lecturer, Advanced Academic Program,
Johns Hopkins University, Baltimore, MD, USA
DOI: 10.1177/0003603X16657214
I. Introduction
The second edition of Econometrics—Legal, Practical, and Technical Issues (henceforth Econo-
metrics) 1 comes nine years after the publication of the first edition by the American Bar Association’s
Section of Antitrust Law. Section Chair Christopher B. Hockett states in the foreword that the second
edition has been ‘‘substantially rewritten, reorganized and expanded.’’2 These changes serve the reader
well. While the book’s intended audience is antitrust attorneys, it is equally valuable for economists,
who will find the chapters on the presentation of econometric findings, evidentiary issues, and expert
discovery particularly helpful.
Econometrics succeeds in readability and accessibility. The book focuses on intuitions rather than
technical nuances, and the pedagogical style of the writing is refreshing. In a little over 400 pages, the
book covers a range of important practical issues, from fundamental concepts to advanced applica-
tions. The book also contains numerous citations to the vast academic literature. It is not an encyclo-
pedic or an authoritative treatment of econometric theory, but it will greatly reduce the learning curve
for both practicing economists and antitrust lawyers. The numerous references in the book are an
important resource to consult when one intends to rely on certain technical arguments in the book.
The new organizing principle of the book is especially recommendable. After an overview and
introduction in chapter 1, chapters 2 through 7 roughly follow the order of an empirical study typical in
litigation. These chapters cover the formulation of empirical questions, the econometric framework,
types of data, and data considerations and limitations. Subsequent chapters discuss how to specify and
estimate appropriate econometric models and how to interpret regression results. Chapter 7 is a
valuable guide and offers practical tips on how complex econometric analysis can be presented to
nonexperts. The subsequent chapters discuss evidentiary issues for expert witnesses using econometric
analysis, as well as expert discovery issues. These are followed by chapters (11, 12, and 13) on the use
of econometrics in market definition, merger review, and class certification, respectively. Chapter 11
on applying econometrics to damages estimation is notable for advancing some novel ideas and
recommendations.
1. ECONOMETRICS—LEGAL, PRACTICAL, AND TECHNICAL ISSUES (Lawrence Wu. ed., 2d ed. 2014).
2. Id. at xiii.
Corresponding Author:
Ai Deng, 1300 Eye Street NW, Suite 600E, Washington, DC 20005, USA.
Email: ai.deng@bateswhite.com.

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462
The Antitrust Bulletin 61(3)
Following the tradition of the first edition of Econometrics, the significantly revised and improved
second edition is expected to be an important reference for attorneys, economists, and judges for years
to come.3 In combination with the numerous literature references cited in the book, attorneys who go
through carefully the second edition will know enough about econometrics to be more than ‘‘danger-
ous.’’ At the same time, for a book that succeeds in its pedagogical style and such broad coverage, it is
inevitable that certain technical subtleties will be lost and certain discussions will be omitted. To assist
readers of the book, I elaborate on some areas that warrant more sophisticated consideration and/or
more precise definitions. My comments in this article are selective and are not meant to comprise a
comprehensive review of the book.
II. Comments
A. Damages Estimation
Chapter 12 (‘‘Applying Econometrics to Estimate Damages’’) provides a summary on damages esti-
...