Working Paper: NBER ID: w14199
Authors: Dennis W. Carlton; Patrick Greenlee; Michael Waldman
Abstract: 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.
Keywords: multiproduct pricing; antitrust; loyalty discounts; predatory pricing
JEL Codes: L4
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| bundled loyalty discounts (L42) | anticompetitive effects (L41) |
| significant scale economies (F12) | exclusionary conduct (L12) |
| denying scale to rivals (D74) | reduce competition (L49) |
| multiproduct pricing strategies (L11) | non-exclusionary motives (L21) |
| AMC's antitrust tests (K21) | false positives in antitrust violations (L49) |