Measuring Business Interruption Losses and Other Commercial Damages, 3rd Edition

CHAPTER 4Industry Analysis

An industry analysis is often an integral part of the overall business interruption loss analysis. As part of the due diligence process in measuring such losses, the expert may need to research and analyze the economics of the plaintiff’s industry. However, there may be cases where the issues are so straightforward and narrowly defined that such an analysis is not necessary. Typically, the economic expert does not specialize in the plaintiff’s industry. Depending on the facts and nature of the case, the expert may have to do research on the trends in the industry as well as other factors relevant to the litigation. This process may involve gathering of relevant industry data and statistics. Standard tools of economic analysis are employed to conduct this industry analysis.

Industry analysis draws on the subfield within microeconomics known as industrial organization, which is the study of the structure of an industry and the interaction of companies within that industry. Among the topics studied in this field are the level of competition and the determination of prices and quantities in a given industry. While industrial organization is a broad field and covers many issues that are not relevant to a litigation‐oriented industry analysis, the field does provide some useful tools of analysis that may be relevant depending on the nature of the case.

Sources of Industry Data

There are two main sources of industry data: government sources and private ...