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The End of the Robinson-Patman Act? Evidence from Legal Case Data

Author

Listed:
  • Ryan Luchs

    (Palumbo-Donahue School of Business, Duquesne University, Pittsburgh, Pennsylvania 15282)

  • Tansev Geylani

    (Joseph M. Katz Graduate School of Business, University of Pittsburgh, Pittsburgh, Pennsylvania 15260)

  • Anthony Dukes

    (Marshall School of Business, University of Southern California, Los Angeles, California 90089)

  • Kannan Srinivasan

    (Tepper School of Business, Carnegie Mellon University, Pittsburgh, Pennsylvania 15213)

Abstract

The Robinson-Patman Act (RP), an antitrust statute aimed at protecting small businesses, limits price setting in distribution channels. To avoid costly penalties under RP, managers take a variety of precautions when pricing to retailers and wholesalers. But how likely is a court to find a defendant guilty of violating the RP? We find that this likelihood has dropped drastically as a result of recent Supreme Court rulings from more than 1 in 3 before 1993 to less than 1 in 20 for the period 2006-2010. The analysis also points to an increased success of the no harm to competition defense, which reflects the view that the courts have raised the hurdle for plaintiffs to establish competitive harm. Finally, our results indicate that smaller plaintiffs over time have fared worse than larger ones, a trend that challenges the notion that RP protects small businesses.

Suggested Citation

  • Ryan Luchs & Tansev Geylani & Anthony Dukes & Kannan Srinivasan, 2010. "The End of the Robinson-Patman Act? Evidence from Legal Case Data," Management Science, INFORMS, vol. 56(12), pages 2123-2133, December.
    • Handle: RePEc:inm:ormnsc:v:56:y:2010:i:12:p:2123-2133
    DOI: 10.1287/mnsc.1100.1244
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Ioannis N. Pinopoulos, 2022. "Input Price Discrimination, Two‐Part Tariffs and Bargaining," Journal of Industrial Economics, Wiley Blackwell, vol. 70(4), pages 1058-1090, December.
    2. Yonezawa, Koichi & Gomez, Miguel I. & Richards, Timothy J., 2018. "The Robinson-Patman Act and Vertical Relationships in Food Retailing," 2018 Annual Meeting, August 5-7, Washington, D.C. 274204, Agricultural and Applied Economics Association.
    3. Fabian Herweg & Daniel Müller, 2014. "Price Discrimination in Input Markets: Quantity Discounts and Private Information," Economic Journal, Royal Economic Society, vol. 124(577), pages 776-804, June.
    4. Timothy J. Richards, 2022. "Agribusiness and policy failures," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 44(1), pages 350-363, March.
    5. Roman Inderst & Greg Shaffer, 2019. "Managing Channel Profits When Retailers Have Profitable Outside Options," Management Science, INFORMS, vol. 65(2), pages 642-659, February.
    6. 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.
    7. Anthony Dukes & Tansev Geylani & Yunchuan Liu, 2014. "Dominant retailers’ incentives for product quality in asymmetric distribution channels," Marketing Letters, Springer, vol. 25(1), pages 93-107, March.
    8. Timothy J Richards & Celine Bonnet & Zohra Bouamra-Mechemache, 2018. "Complementarity and bargaining power," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 45(3), pages 297-331.
    9. Youping Li & Jie Shuai, 2022. "Input price discrimination and horizontal shareholding," Journal of Regulatory Economics, Springer, vol. 61(1), pages 48-66, February.
    10. Ioannis N. Pinopoulos, 2018. "Input price discrimination with secret linear contracting," Discussion Paper Series 2018_01, Department of Economics, University of Macedonia, revised Jan 2018.
    11. 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.
    12. Roger D. Blair & Christina DePasquale, 2014. ""Antitrust's Least Glorious Hour": The Robinson-Patman Act," Journal of Law and Economics, University of Chicago Press, vol. 57(S3), pages 201-215.
    13. Jin, Yannan & Wu, Xiaole & Hu, Qiying, 2017. "Interaction between channel strategy and store brand decisions," European Journal of Operational Research, Elsevier, vol. 256(3), pages 911-923.
    14. Aydin, Ayhan & Parker, Rodney P., 2018. "Innovation and technology diffusion in competitive supply chains," European Journal of Operational Research, Elsevier, vol. 265(3), pages 1102-1114.
    15. S. Alex Yang & John R. Birge & Rodney P. Parker, 2015. "The Supply Chain Effects of Bankruptcy," Management Science, INFORMS, vol. 61(10), pages 2320-2338, October.
    16. Li, Youping, 2013. "Timing of investments and third degree price discrimination in intermediate good markets," Economics Letters, Elsevier, vol. 121(2), pages 316-320.
    17. Weining Bao & Jian Ni, 2017. "Could Good Intentions Backfire? An Empirical Analysis of the Bank Deposit Insurance," Marketing Science, INFORMS, vol. 36(2), pages 301-319, March.

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