The Robinson-Patman Act and spatial competition

Abstract

The purpose of this dissertation is to investigate and analyze the effect of the Robinson-Patman Act on spatial pricing, marketing, and competition in the United States. An investigation of the history of the Robinson-Patman legislation reveals that much of the impetus for the legislation came from wholesalers whose position and function were being eroded by the growth of chain stores. An understanding that a motivation for the Robinson-Patman legislation was to protect the manufacturer -wholesaler -retailer marketing structure provides insight as to why the wording and structure of the Act are contradictory to and inconsistent with economic theories of competition. The analysis in this dissertation proceeds beyond a theoretical comparison and focuses on the empirical economic analysis of selected Robinson-Patman cases involving spatial competition. The three cases selected are Utah Pie Co. v. Continental Baking Co., et al. (368 U.S. 685), Anheuser-Busch, Inc. v. Federal Trade Commission (363 U.S. 536), and Borden Co. v. Federal Trade Commission (383 U.S. 637). The record of these three cases demonstrates that the application of the Robinson-Patman Act to economic activities involving spatial competition has been most cumbersome and has generated some of the longest and most involved judicial proceedings. The resulting judicial findings of illegal activity and economic injury in these cases were in such contrast to accepted norms of pricing and competition that extensive controversies in law and economics were generated. An innovative analysis of these cases is performed using as a basis the assimilation and extension of spatial economic theory by Professor M. L. Greenhut. Empirical economic methodologies using statistical and analytical techniques are developed to analyze the data on prices, sales, location of markets, and location of competitors presented in the record and briefs on these cases. These analyses determine a set of results on the economic propriety and economic effect of competitive activity from the perspective of spatial economics. These results provide a contrast to the judicial findings arrived at through adherence to the artificial structures and criteria of the Robinson-Patman Act for determining the legality of pricing and sales activity.