CE Director Dr. Michael A. Williams, CE Senior Consultant Dr. Wei Zhao and Professor Yonghong An published an article in the American Bar Association (“ABA”) Economics Committee Newsletter entitled “Counterintuitive signs in reduced form price regressions.”

 

Reduced form price regressions are widely used in price-fixing cases and in merger investigations. In some cases, the estimated coefficients of one or more independent variables may have signs inconsistent with economic theory. This article explores how reduced form price regressions are used, potential inconsistent results from such regressions, and several common interpretations and causes of counterintuitive signs. The article concludes with a summary checklist for antitrust practitioners.