Herweg, F. & Müller, D. (2015) “Price discrimination by big manufacturers: Supporting arguments for its prohibition by European competition law“, VoxEU Organisation, 07 Απριλίου.
Manufacturers discriminating among retailers is an important issue in competition policy. Specifically, the EU allows quantity discounts but forbids discriminatory discounts – a policy that does not jive with standard economic analysis which suggests that banning price discrimination improves allocative efficiency and typically also raises overall welfare. This column argues that the research – and the recommendations that flow from it – are based on excessively restrictive assumptions. When there are nonlinear wholesale contracts, e.g. quantity discounts, the presence of private information can reverse the standard analysis in a way that supports the EU’s policy.
Price discrimination by manufacturers is a recurring theme in antitrust cases. For instance, in February 2015, the federal district court in Beaumont, Texas discussed the claim of Games People Play (GPP), a major retailer for golf equipment in the US, against Nike. GPP alleged that Nike had charged the retailer significantly higher prices for its Viktory Red irons than other retailers. Nike’s pricing practice may have harmed competition and thus may have increased prices for final consumers (Games People Play, Inc. v. Nike, Inc.; case number 1:14-CV-321).
Price discrimination by manufacturers is governed by the Robinson-Patman Act in the US and Article 102 TFEU in the EU. According to these legal statutes, a manufacturer who charges different prices to different retailers may be found liable of an infringement of the laws. The economic analysis of the effects of price discrimination on overall welfare and consumer surplus dates back to Robinson (1933). The traditional economic view regarding price discrimination in intermediate-goods markets is that the ‘wrong’ downstream firm receives a discount; i.e. less efficient retailers obtain lower wholesale prices than more efficient retailers. As a result, banning price discrimination improves allocative efficiency and typically also overall welfare (Katz 1987).
Σχετικές αναρτήσεις:
Oberndorfer, L. (2015) “How The Troika Breaches EU Law“, Social Europe Journal, 18 Μαρτίου.- Mitchell, B. (2015) “Germany has a convenient but flawed collective memory“, Bill Mitchell Blog, 02 Φεβρουαρίου.
- Deakin, S. (2014) “Law And Solidarity: Reflections On August 1914“, Social Europe Journal, 13 Οκτωβρίου.