The Robinson–Patman Act and Vertical Relationships

Koichi Yonezawa, Miguel Gomez and Timothy J Richards

American Journal of Agricultural Economics, 2020, vol. 102, issue 1, 329-352

Abstract: Bargaining between consumer‐product manufacturers and their retail customers is at least nominally constrained by the prohibitions on price discrimination of the Robinson–Patman Act (RPA) of 1936. However, because the RPA is generally regarded as being inconsistent with the anti‐trust principle of protecting consumers, it is not often enforced by the Federal Trade Commission or the Anti‐trust Division of the Department of Justice. Because of the perceived ineffectiveness of the RPA, it is unclear whether manufacturers follow the letter of the law, or actively bargain with their downstream customers. In this paper, we use data on wholesale and retail prices for yogurt products, and a Nash‐in‐Nash vertical bargaining model, to test whether the RPA represents a real constraint on bargaining between manufacturers and retailers. We find that this is not the case, and that vertical markets for consumer goods are more accurately characterized as bargaining‐markets than markets regulated by the RPA. Further, we demonstrate that strict enforcement of the RPA would improve social welfare, but would not protect weak retailers.

Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

Downloads: (external link)
https://doi.org/10.1093/ajae/aaz049

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wly:ajagec:v:102:y:2020:i:1:p:329-352

Access Statistics for this article

More articles in American Journal of Agricultural Economics from John Wiley & Sons
Bibliographic data for series maintained by Wiley Content Delivery ().