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Contracts Versus Price Discrimination: Evidence From the SONJ Case

Contracts Versus Price Discrimination: Evidence From the SONJ Case A feature of the Standard Oil antitrust case is that much of the case revolves around Standard’s selling lubricating oils to railroads. This paper explores the government’s theory that Standard’s rebates to the Pennsylvania RR represented price discrimination. Standard’s defense was an assertion that the lubrication contracts were relational contracts involving a service and that the behavior which the government labeled discriminatory represented persistent inefficient behavior on the part of the Pennsylvania system. Data from the trial and other sources are used to attempt to determine if the evidence presented at trial favors price discrimination or Standard’s inefficiency defense. This is done using data envelopment analysis to determine the inefficiency the Pennsylvania RR. However, in the end, most aspects of the case must be considered “not proven.” http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Review of Industrial Organization Springer Journals

Contracts Versus Price Discrimination: Evidence From the SONJ Case

Brown, John
Review of Industrial Organization , Volume 38 (3) – Mar 1, 2011
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References (5)

Publisher
Springer Journals
Copyright
Copyright © 2011 by Springer Science+Business Media, LLC.
Subject
Economics; Industrial Organization; Microeconomics
ISSN
0889-938X
eISSN
1573-7160
DOI
10.1007/s11151-011-9285-9
Publisher site
See Article on Publisher Site

Abstract

A feature of the Standard Oil antitrust case is that much of the case revolves around Standard’s selling lubricating oils to railroads. This paper explores the government’s theory that Standard’s rebates to the Pennsylvania RR represented price discrimination. Standard’s defense was an assertion that the lubrication contracts were relational contracts involving a service and that the behavior which the government labeled discriminatory represented persistent inefficient behavior on the part of the Pennsylvania system. Data from the trial and other sources are used to attempt to determine if the evidence presented at trial favors price discrimination or Standard’s inefficiency defense. This is done using data envelopment analysis to determine the inefficiency the Pennsylvania RR. However, in the end, most aspects of the case must be considered “not proven.”

Journal

Review of Industrial Organization – Springer Journals

Published: Mar 1, 2011

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