Friday, August 1, 2008
Posted by D. Daniel Sokol
Dennis W. Carlton (University of Chicago - Graduate School of Business), Patrick Greenlee (U.S. Department of Justice - Antitrust Division), Michael Waldman (Cornell - Johnson School of Business) have posted a very interesting read - Assessing the Anticompetitive Effects of Multiproduct Pricing.
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.