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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
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    File URL: http://dx.doi.org/10.1287/mnsc.1100.1244
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    References listed on IDEAS

    as
    1. Ross, Thomas W, 1984. "Winners and Losers under the Robinson-Patman Act," Journal of Law and Economics, University of Chicago Press, vol. 27(2), pages 243-271, October.
    2. Katz, Michael L, 1987. "The Welfare Effects of Third-Degree Price Discrimination in," American Economic Review, American Economic Association, vol. 77(1), pages 154-167, March.
    3. Elzinga, Kenneth G & Hogarty, Thomas F, 1978. "Utah Pie and the Consequences of Robinson-Patman," Journal of Law and Economics, University of Chicago Press, vol. 21(2), pages 427-434, October.
    4. O'Brien, Daniel P & Shaffer, Greg, 1994. "The Welfare Effects of Forbidding Discriminatory Discounts: A Secondary Line Analysis of Robinson-Patman," Journal of Law, Economics, and Organization, Oxford University Press, vol. 10(2), pages 296-318, October.
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    Citations

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    Cited by:

    1. 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.
    2. 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.
    3. 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.
    4. 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.
    5. 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.
    6. repec:eee:ejores:v:265:y:2018:i:3:p:1102-1114 is not listed on IDEAS
    7. Li, Youping, 2013. "Timing of investments and third degree price discrimination in intermediate good markets," Economics Letters, Elsevier, vol. 121(2), pages 316-320.
    8. Bonnet, Céline & Bouamra-Mechemache, Zohra & Richards, Timothy J., 2017. "Complementarity and Bargaining Power," TSE Working Papers 16-772, Toulouse School of Economics (TSE).

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