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On the Economics of the “Meeting Competition Defense” Under the Robinson–Patman Act

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  • Aguirre Iñaki

    (Departamento de Fundamentos del Análisis Económico I and BRiDGE Group, University of the Basque Country UPV/EHU, Avda. Lehendakari Aguirre 83, 48015-Bilbao, Spain)

Abstract

This paper studies the welfare effects of third-degree price discrimination when competitive pressure varies across markets. In particular, we study the economic aspects of the Robinson–Patman Act associated with the “meeting competition defense.” Using equilibrium models, the main result we find is that this defense might be used successfully in cases of primary line injury precisely when it should not be used, namely when price discrimination reduces social welfare. This result obtains both when discrimination appears in the final good market and when it is used in the intermediate goods market. We also find that these results may maintain under secondary line injury.

Suggested Citation

  • Aguirre Iñaki, 2016. "On the Economics of the “Meeting Competition Defense” Under the Robinson–Patman Act," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 16(3), pages 1213-1238, September.
    • Handle: RePEc:bpj:bejeap:v:16:y:2016:i:3:p:1213-1238:n:2
    DOI: 10.1515/bejeap-2015-0146
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    References listed on IDEAS

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    1. Yongmin Chen & Marius Schwartz, 2015. "Differential pricing when costs differ: a welfare analysis," RAND Journal of Economics, RAND Corporation, vol. 46(2), pages 442-460, June.
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    Cited by:

    1. Aguirre, Iñaki, 2019. "Oligopoly price discrimination, competitive pressure and total output," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 13, pages 1-16.
    2. Koichi Yonezawa & Miguel I Gómez & Timothy J Richards, 2020. "The Robinson–Patman Act and Vertical Relationships," American Journal of Agricultural Economics, John Wiley & Sons, vol. 102(1), pages 329-352, January.
    3. Aguirre, Iñaki, 2017. "Cournot Oligopoly, Price Discrimination and Total Output," MPRA Paper 80166, University Library of Munich, Germany.
    4. Aguirre, Iñaki & Yenipazarli, Arda, 2022. "A Rationale for the “Meeting Competition Defense” when Competitive Pressure Varies Across Markets," MPRA Paper 113746, University Library of Munich, Germany.

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    More about this item

    Keywords

    price discrimination; Robinson–Patman Act; effects on social welfare;
    All these keywords.

    JEL classification:

    • D42 - Microeconomics - - Market Structure, Pricing, and Design - - - Monopoly
    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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