Minimum Retail Pricing

The New York Times reports:

Striking down an antitrust rule nearly a century old, the Supreme Court ruled on Thursday that it was not automatically unlawful for manufacturers and distributors to agree on minimum retail prices.

The decision will give producers significantly more, though not unlimited, power to dictate retail prices and to restrict the flexibility of discounters.

The attempts to prevent manufacturers from setting minimum retail prices are misguided. Greg Mankiw previously explained this here:

… some economists defend resale price maintenance on two grounds. First, they deny that it is aimed at reducing competition. To the extent that Superduper Electronics has any market power, it can exert that power through the wholesale price, rather than through resale price maintenance. Moreover, Superduper has no incentive to discourage competition among its retailers. Indeed, because a cartel of retailers sells less than a group of competitive retailers, Superduper would be worse off if its retailers were a cartel.

It is Bryan Caplan, however, who summarizes my feelings on the issue:

Since I’m what Larry White of NYU … calls “the ‘antitrust crazies’ who want to repeal of [sic] all antitrust laws,” you know where I stand.

Indeed.

One response to “Minimum Retail Pricing

  1. Eugene Kantarovich

    The Minimum Resale Price is the lowest price and everybody is looking for that.

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