Econometric tests for analyzing common impact

Abstract

In antitrust class-action litigation, courts are increasingly unlikely to accept the presumption that all class members were harmed by price-fixing among a group of firms or by exclusionary behavior by a single firm. Econometric methods typically applied in antitrust and other settings estimate the average effect of the challenged conduct, but do not inform impact for individual class members. We present classwide econometric methods and statistical tests for detecting the existence (or lack thereof) of common impact and determining what proportion (if any) of the proposed class suffered injury in many class actions. We conclude that econometric tools can meaningfully inform the legal process, even when courts demand proof of common impact.

Citation

Caves, K.W. and Singer, H.J. (2014), "Econometric tests for analyzing common impact", The Law and Economics of Class Actions (Research in Law and Economics, Vol. 26), Emerald Group Publishing Limited, Leeds, pp. 135-160. https://doi.org/10.1108/S0193-589520140000026005