The role of contract structure for damage quantification: pitfalls and solutions

Abstract

ABSTRACT Damage quantification in antitrust cases typically revolves around overcharge and pass-on estimation. In vertical industry structures, both measures crucially depend on contract structure, with linear and two-part tariffs being the most common contract types. While most of the damages literature focuses on linear contracts, two-part tariffs are mostly neglected. We discuss implications of tariff structure for damage quantification, highlight common pitfalls and propose practical solutions in damage assessment when two-part tariffs are present.