Abstract
The prominent Babies R Us decision (McDonough et al. v. Toys R Us, Inc., 2009) was the first to explore the economic consequences of resale price maintenance after the Supreme Court’s Leegin decision. Previously, litigation concerned the presence or absence of an agreement; but that changed with the new jurisprudence which instead emphasized the restraint’s direct anti-competitive effects. While the district court’s decision in the Babies R Us case rested on the factual circumstances of the case, it did not have before it an economic model through which those facts could be integrated. This paper offers such a model, the predicates of which are drawn from the case. The conclusions derived from the model are entirely consistent with the court’s decision
This is a preview of subscription content, log in via an institution to check access.
Similar content being viewed by others
References
Asker, J., & Bar-Isaac, H. (2014). Raising retailers’ profits: on vertical practices and the exclusion of rivals. The American Economic Review, 104(2), 672–686.
Blair, R. D., & Kaserman, D. L. (2009). Antitrust economics (2nd ed.). New York: Oxford University Press.
Comanor, W. S. (2011.) Antitrust policy towards resale price maintenance following Leegin. Antitrust Bulletin, 55(1), 59–78.
Comanor, W. S. (2013) Leegin and its progeny: Implications for internet commerce. Antitrust Bulletin, 58(1), 107–127.
Comanor, W. S., & Rey, P. (2000). Vertical restraints and the market power of large distributors. Review of Industrial Organization, 17(2), 135–153.
Dr. Miles Med. Co. v. John D. Park & Sons, Co., 220 U.S. 373 (1911).
Leegin Creative Leather Products v. PSKS, Inc., 551 U.S. 877 (2007).
Lemley, M. A., & Shapiro, C. (1991). Patent holdup and royalty stacking. Texas Law Review, 85, 2006.
McDonough v. Toys R Us, Inc., 638 F. Supp. 2d 461 (E.D. Pa. 2009).
Salinger, M. A. (1988) Vertical mergers and market foreclosure. Quarterly Journal of Economics, 103, 345–356.
Waterson, M. (1980). Price cost margins and successive market power. Quarterly Journal of Economics, 94, 135–150.
Acknowledgements
This research benefited greatly from the helpful comments and suggestions of H.E. Frech and Patrick Rey.
Author information
Authors and Affiliations
Corresponding author
Rights and permissions
About this article
Cite this article
Comanor, W.S., Salant, D. Resale Price Maintenance Post Leegin: A Model of RPM Incentives. Rev Ind Organ 50, 169–179 (2017). https://doi.org/10.1007/s11151-016-9558-4
Published:
Issue Date:
DOI: https://doi.org/10.1007/s11151-016-9558-4