NATIONAL BUREAU OF ECONOMIC RESEARCH
U.S. Department of Justice
600 E Street NW Suite 10000
Washington, DC 20530
NBER Working Papers and Publications
|July 2008||Assessing the Anticompetitive Effects of Multiproduct Pricing|
with Dennis W. Carlton, Michael Waldman: w14199
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.