Posted by Social Science Research Network
How Big is Big? A Caveat Regarding Difference-in-Differences Analysis – Shawn W. Ulrick (U.S. Federal Trade Commission) & Seth B. Sacher (U.S. Federal Trade Commission)
Abstract: Difference-in-differences, or “D-in-D,” is perhaps the most broadly applied econometric technique in retrospective analyses of competition matters. We discuss a possible pitfall regarding this procedure. We argue that a positive and significant event variable coefficient is not a sufficient condition for concluding there have been anticompetitive price effects. We use simulations to demonstrate that even in cases where the alleged anticompetitive activity had no anticompetitive effect, the D-in-D procedure can still produce positive and significant event variables. This paper does not take issue with D-in-D in principle but rather as it is often practiced. Our results imply that while D-in-D is an important tool, the researcher must conduct additional analyses to put the D-in-D result into context before concluding a significant event variable is indicative of anticompetitive effects. We suggest a specific approach. We note that our results may have important implications for the current state of the academic literature regarding retrospectives in antitrust as well as for practitioners.
Featured News
CVS Health Explores Potential Breakup Amid Investor Pressure: Report
Oct 3, 2024 by
CPI
DirecTV Acquires Dish TV, Creating 20 Million-Subscriber Powerhouse
Oct 3, 2024 by
CPI
South Korea Fines Kakao Mobility $54.8 Million for Anti-Competitive Practices
Oct 3, 2024 by
CPI
Google Offers Settlement in India’s Antitrust Case Regarding Smart TVs
Oct 3, 2024 by
CPI
Attorney Challenges NCAA’s $2.78 Billion Settlement in Landmark Antitrust Cases
Oct 3, 2024 by
nhoch@pymnts.com
Antitrust Mix by CPI
Antitrust Chronicle® – Refusal to Deal
Sep 27, 2024 by
CPI
Antitrust’s Refusal-to-Deal Doctrine: The Emperor Has No Clothes
Sep 27, 2024 by
Erik Hovenkamp
Why All Antitrust Claims are Refusal to Deal Claims and What that Means for Policy
Sep 27, 2024 by
Ramsi Woodcock
The Aspen Misadventure
Sep 27, 2024 by
Roger Blair & Holly P. Stidham
Refusal to Deal in Antitrust Law: Evolving Jurisprudence and Business Justifications in the Align Technology Case
Sep 27, 2024 by
Timothy Hsieh