Flawed Economic Models Have Misled RPM Policy: Changes in Canada, Europe and the United States

Flawed Economic Models Have Misled RPM Policy: Changes in Canada, Europe and the United States Some of the influential literature that supports the resale price maintenance efficiency view is flawed when it relies on presale services that do not modify the value-in-use of a good. Crucially, we consider that value-in-use may differ from prepurchase perceived value. We apply the value-in-use standard, which exposes the loss in consumer surplus in Bork’s model and reveals that even Bork’s dissenters significantly underestimate their calculated losses to inframarginal consumers. When consumer surplus is the antitrust/competition policy standard, our results suggest that a rule-of-reason regime where authorities or agencies bear the burden of proof can be unfavourable to consumers. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Review of Industrial Organization Springer Journals

Flawed Economic Models Have Misled RPM Policy: Changes in Canada, Europe and the United States

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Publisher
Springer Journals
Copyright
Copyright © 2017 by Springer Science+Business Media New York
Subject
Economics; Industrial Organization; Microeconomics
ISSN
0889-938X
eISSN
1573-7160
D.O.I.
10.1007/s11151-017-9564-1
Publisher site
See Article on Publisher Site

Abstract

Some of the influential literature that supports the resale price maintenance efficiency view is flawed when it relies on presale services that do not modify the value-in-use of a good. Crucially, we consider that value-in-use may differ from prepurchase perceived value. We apply the value-in-use standard, which exposes the loss in consumer surplus in Bork’s model and reveals that even Bork’s dissenters significantly underestimate their calculated losses to inframarginal consumers. When consumer surplus is the antitrust/competition policy standard, our results suggest that a rule-of-reason regime where authorities or agencies bear the burden of proof can be unfavourable to consumers.

Journal

Review of Industrial OrganizationSpringer Journals

Published: Jan 19, 2017

References

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