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Flawed Economic Models Have Misled RPM Policy: Changes in Canada, Europe and the United States

Author

Listed:
  • Tarcisio da Graça

    (Université du Québec en Outaouais)

  • Robert Masson

    (Cornell University)

Abstract

Some of the influential literature that supports the resale price maintenance efficiency view is flawed when it relies on presale services that do not modify the value-in-use of a good. Crucially, we consider that value-in-use may differ from prepurchase perceived value. We apply the value-in-use standard, which exposes the loss in consumer surplus in Bork’s model and reveals that even Bork’s dissenters significantly underestimate their calculated losses to inframarginal consumers. When consumer surplus is the antitrust/competition policy standard, our results suggest that a rule-of-reason regime where authorities or agencies bear the burden of proof can be unfavourable to consumers.

Suggested Citation

  • Tarcisio da Graça & Robert Masson, 2017. "Flawed Economic Models Have Misled RPM Policy: Changes in Canada, Europe and the United States," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 50(2), pages 181-207, March.
    • Handle: RePEc:kap:revind:v:50:y:2017:i:2:d:10.1007_s11151-017-9564-1
    DOI: 10.1007/s11151-017-9564-1
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    References listed on IDEAS

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