FTC Perspectives on Econometric Analyses in Antitrust Cases

• Pages: 115-129

115

CHAPTER V

FTC PERSPECTIVES ON ECONOMETRIC

ANALYSES IN ANTITRUST CASES

A. Introduction

This chapter discusses perspectives on how to make econometric

analyses more useful in antitrust investigations and litigation before the

Federal Trade Commission (FTC). The chapter first briefly discusses the

role of econometrics and empirical analyses generally in antitrust. Sound

empirical analyses can provide important evidence in an antitrust

investigation or litigation. It then suggests some best practices for

developing econometric studies that will be useful to the FTC in its

decision making. The chapter also provides examples of useful

econometric analyses that are frequently conducted in FTC

investigations.1

Before discussing econometric analyses, a few more general

comments on quantitative analyses are appropriate. Some of the most

important issues in antitrust cases often hinge on quantitative evidence

(e.g., levels and trends in prices, market shares, sales, margins,

profitability, and shipment patterns). These types of quantitative

analyses are often very important and frequently do not involve statistical

or econometric analysis. Although there has been much attention in

recent years to the use of formal modeling and econometric estimation in

antitrust, one should not forget that quantitative analyses of various kinds

are useful. In addition, some of the basic tenets of sound econometric

analysis (e.g., starting with data that are sufficiently reliable for the task

at hand and utilizing sound economic methodologies suitable to the

issues addressed and the data) apply to any sound empirical analysis.

1. See also Daniel S. Hosken et al., Demand System Estimation and its

Application to Horizontal Merger Analysis (Fed. Trade Comm’n,

Working Paper No. 246, 2002), available at http://www.ftc.gov/be/

workpapers/wp246.pdf .