Price Discrimination as a Violation of the Sherman Act

Posted by Social Science Research Network

Price Discrimination as a Violation of the Sherman Act

By Ramsi Woodcock (Georgia State University)

Abstract:     The advance of the information age promises to make it possible for producers to charge consumers tailored prices that extract maximum value from them, a practice known as perfect price discrimination. I show that price discrimination violates antitrust law when it is supported by conduct designed to prevent those to which a price discriminator charges low prices from undermining the scheme by reselling the product to those to whom the discriminator wishes to charge high prices. I show that such conduct is not protected by the right, recognized by antitrust, of a seller to refuse to deal with competitors, such as resellers, particularly when the remedy antitrust would impose is an order requiring nondiscrimination, instead of cessation of the exclusionary conduct.

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