Assessing the Anticompetitive Effects of Multiproduct Pricing
Dennis W. Carlton
University of Chicago - Booth School of Business; National Bureau of Economic Research (NBER)
U.S. Department of Justice - Antitrust Division
Cornell University - Samuel Curtis Johnson Graduate School of Management
NBER Working Paper No. w14199
In response to the "standardless" approach used in LePage's v. 3M, the Antitrust Modernization Commission (AMC) and others advocate using a discount allocation approach to assess whether bundled loyalty discounts violate Section 2 of the Sherman Act. This approach treats loyalty discounts like predatory pricing. The analogy to predatory pricing is flawed. We propose an alternative approach that focuses on the presence of significant scale economies. We use our approach to analyze LePage's, as well as the recent PeaceHealth decision.
Number of Pages in PDF File: 35
Date posted: August 4, 2008
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