This paper presents several methods and discusses salient issues pertaining to the use of reduced-form models to estimate overcharges in antitrust matters (e.g., price-fixing) where "but-for" prices may be less than actual prices during the anticompetitive period. In particular, two common types of reduced-form estimations are discussed: the "dummyvariable approach" and the "forecasting approach". Under either methodology, an error correction model is then specified as one way to address technical problems often found in applied time-series analysis-nonstationary data and the existence of short-term and longterm dynamics.

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Much of the literature concerning trade liberalization focuses on estimating the effect of increased trade on aggregate economic indicators, such as the growth in GDP per capita. Although there is a general recognition that trade benefits consumers, there is little research that estimates the direct impact of increased trade on U.S. consumers. We take broad measures of the economic impact of trade liberalization from three authoritative studies and apply economic principles to estimate the impact of increased trade on the income of U.S. households. We find, for example, that U.S. households gained about $2,500 in 2002 from increased trade, or the equivalent of almost six percent of the median household income in that year. We believe these results should be given weight in the ongoing debate regarding the effect of globalization.Business Economics (2005) 40, 41–51; doi:10.2145/20050306

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