Mr. Magoo Visits Wal-Mart: Finding the Right Lens for Antitrust
24 Pages Posted: 11 Mar 2008
Date Written: November 30, 2006
Wal-Mart, the largest of power buyers, represents a paradox. From one perspective it is exactly the type of company we want our economy to produce. On the other hand, from several different perspectives, it represents a danger to be condemned. What can we say about the Wal-Mart phenomenon from the perspective of antitrust? This paper sifts through the criticisms and holds them up against the standard of antitrust, with particular attention to predation, monopsony, great bargaining power that is less than monopsonistic, and price discrimination. Special attention is given to the so-called waterbed effect. The paper asks whether antitrust, which developed when manufacturers were king, is up to the challenge of the power buyer in an increasingly retailer-driven marketplace. An appendix provides a set of questions that need to be answered.
Keywords: antitrust, power buyer, monopsony, price discrimination, waterbed effect, bargaining power, retailing, goals, choice
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