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Resale Price Maintenance Post Leegin: A Model of RPM Incentives

Author

Listed:
  • William S. Comanor

    (University of California
    University of California)

  • David Salant

    (Toulouse School of Economics)

Abstract

The prominent Babies R Us decision (McDonough et al. v. Toys R Us, Inc., 2009) was the first to explore the economic consequences of resale price maintenance after the Supreme Court’s Leegin decision. Previously, litigation concerned the presence or absence of an agreement; but that changed with the new jurisprudence which instead emphasized the restraint’s direct anti-competitive effects. While the district court’s decision in the Babies R Us case rested on the factual circumstances of the case, it did not have before it an economic model through which those facts could be integrated. This paper offers such a model, the predicates of which are drawn from the case. The conclusions derived from the model are entirely consistent with the court’s decision

Suggested Citation

  • William S. Comanor & David Salant, 2017. "Resale Price Maintenance Post Leegin: A Model of RPM Incentives," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 50(2), pages 169-179, March.
    • Handle: RePEc:kap:revind:v:50:y:2017:i:2:d:10.1007_s11151-016-9558-4
    DOI: 10.1007/s11151-016-9558-4
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    References listed on IDEAS

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    3. Michael A. Salinger, 1988. "Vertical Mergers and Market Foreclosure," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 103(2), pages 345-356.
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    More about this item

    Keywords

    Leegin decision; RPM incentives; Dominant distributors;
    All these keywords.

    JEL classification:

    • L42 - Industrial Organization - - Antitrust Issues and Policies - - - Vertical Restraints; Resale Price Maintenance; Quantity Discounts

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