Abstract

http://ssrn.com/abstract=2470135
 
 

Citations (2)



 


 



Does Price Discrimination Intensify Competition? Implications for Antitrust


James C. Cooper


George Mason University School of Law - Law & Economics Center

Luke Froeb


Vanderbilt University - Strategy and Business Economics

Daniel P. O'Brien


Federal Trade Commission - Bureau of Economics

Steven Tschantz


Vanderbilt University - Department of Mathematics

2005

Antitrust Law Journal, Vol. 72, No. 2, pp. 327-373, 2005
George Mason Law & Economics Research Paper No. 14-30

Abstract:     
As a general proposition, antitrust law is hostile to price discrimination. This hostility appears to derive from a comparison of perfect competition (with no price discrimination) to monopoly (with price discrimination). Importantly, economists have known for some time that some forms of price discrimination by oligopolists yield different welfare outcomes than price discrimination by a monopolist. This article focuses on the antitrust implications of price discrimination based on consumer location by spatial competitors that, in contrast to monopoly price discrimination, lowers prices for all consumers. In an important class of spatial models and many real world markets, the consumers to whom one firm would like to raise price – its strong market – are another firm’s weak market to which it would like to lower price. When this “best-response asymmetry” exists, the equilibrium outcome of spatial competitors reacting to each other’s discriminatory price reductions may be lower prices for all consumers and lower profits for all firms, compared to an equilibrium in which all firms offer uniform pricing to all consumers. We identify three areas of antitrust that could benefit from this economic insight: mergers of spatial competitors; the use of price discrimination to infer market power; and Robinson-Patman enforcement.

Number of Pages in PDF File: 65

Keywords: antitrust, competition, consumer location, market power, merger, monopoly, oligopoly, spatial competitors, spatial price discrimination, Robinson-Patman Act

JEL Classification: D40, K21

Accepted Paper Series


Download This Paper

Date posted: July 24, 2014  

Suggested Citation

Cooper, James C. and Froeb, Luke and O'Brien, Daniel P. and Tschantz, Steven, Does Price Discrimination Intensify Competition? Implications for Antitrust (2005). Antitrust Law Journal, Vol. 72, No. 2, pp. 327-373, 2005; George Mason Law & Economics Research Paper No. 14-30. Available at SSRN: http://ssrn.com/abstract=2470135

Contact Information

James C. Cooper (Contact Author)
George Mason University School of Law - Law & Economics Center ( email )
3301 Fairfax Drive
Arlington, VA 22201
United States
703-993-9582 (Phone)

George Mason Law School Logo

Luke M. Froeb
Vanderbilt University - Strategy and Business Economics ( email )
Nashville, TN 37203
United States
615-322-9057 (Phone)
615-343-7177 (Fax)

Daniel P. O'Brien
Federal Trade Commission - Bureau of Economics ( email )
601 Pennsylvania Avenue, NW
Washington, DC 20580
United States
Steven T. Tschantz
Vanderbilt University - Department of Mathematics ( email )
Nashville, TN 37240
United States
Feedback to SSRN


Paper statistics
Abstract Views: 170
Downloads: 59
Download Rank: 215,786
Citations:  2

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo1 in 0.360 seconds