Forensic Economics: An Introduction With Special Emphasis on Price Fixing

Abstract

In this paper I aim to explain accepted methods of forensic analysis and how forensic economics is used in the context of competition-law enforcement. I illustrate forensic analysis with examples from antitrust cases involving price fixing.

I define forensic economics as economic analysis delivered to government authorities in public places. (The adjective "forensic" is derived from the Roman Latin word forum). Here, "government" is construed broadly as administrative agencies, regulatory commissions, and judicial bodies. Because regulatory and judicial proceedings are necessarily fact-laden, it follows from this definition that forensic economics is inherently, if not exclusively empirical.

Forensic analyses - whether delivered orally or in writing - are prepared at the behest of a client and generally support the client's interest. Forensic analyses are public in the sense that they are prepared with in anticipation that they will be subject to scrutiny and rebuttal by the client's opponent, and it is often the case that that debate will be carried on in a public setting or be made publicly available later. For that reason, forensic expert opinions are highly strategic documents prepared with an eye to anticipating the opponent's arguments. They are rhetorical in the best Aristotelian sense of that term, and they are in a curious sense peer-reviewed.

Keywords: forensic economics, antitrust, regulation, empirical methods, price fixing

JEL Classification: K21, K14, L41, L44, L65, L11, L13, N60