On the Use of Price-cost Tests in Loyalty Discounts: Which Implications from Economic Theory?
Chiara Fumagalli () and
Massimo Motta ()
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Chiara Fumagalli: Università Bocconi, CSEF and CEPR
CSEF Working Papers from Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy
Abstract:
Recent cases in the US (Meritor, Eisai) and in the EU (Intel ) have revived the debate on the use of price-cost tests in loyalty discount cases. We draw on existing recent economic theories of exclusion and develop new formal material to argue that economics alone does not justify applying a price-cost test to predation but not to loyalty discounts. Still, the latter contain features (they reference rivals and allow to discriminate across buyers and/or units bought) that have a higher exclusionary potential than the former, and this may well warrant closer scrutiny and more severe treatment from antitrust agencies and courts.
Keywords: Market-share discounts; Inefficient foreclosure; Exclusive dealing (search for similar items in EconPapers)
JEL-codes: K21 L41 (search for similar items in EconPapers)
Date: 2015-01-22
New Economics Papers: this item is included in nep-com, nep-cta, nep-hpe, nep-ind and nep-law
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Citations: View citations in EconPapers (2)
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Working Paper: On the use of price-cost tests in loyalty discounts: Which implications from economic theory? (2015) 
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Persistent link: https://EconPapers.repec.org/RePEc:sef:csefwp:385
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