Flawed Economic Models Have Misled RPM Policy: Changes in Canada, Europe and the United States

Tarcisio da Graça () and Robert Masson ()
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Tarcisio da Graça: Université du Québec en Outaouais
Robert Masson: Cornell University

Review of Industrial Organization, 2017, vol. 50, issue 2, No 5, 207 pages

Abstract: Abstract Some of the influential literature that supports the resale price maintenance efficiency view is flawed when it relies on presale services that do not modify the value-in-use of a good. Crucially, we consider that value-in-use may differ from prepurchase perceived value. We apply the value-in-use standard, which exposes the loss in consumer surplus in Bork’s model and reveals that even Bork’s dissenters significantly underestimate their calculated losses to inframarginal consumers. When consumer surplus is the antitrust/competition policy standard, our results suggest that a rule-of-reason regime where authorities or agencies bear the burden of proof can be unfavourable to consumers.

Keywords: Resale price maintenance; Consumer surplus; Welfare effects; Antitrust (search for similar items in EconPapers)
Date: 2017
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DOI: 10.1007/s11151-017-9564-1

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