Brian Albrecht on Price Discrimination, Market Power, and Grocery Prices
Brian Albrecht, ICLE Chief Economist, was quoted in a Washington Monthly article on claims that price discrimination can drive higher grocery prices by allowing dominant retailers to pressure suppliers into raising prices for the rest of the market, while creating a racketeering-style system that weakens competition and pushes up the cost of living. Read the full article here.
Another argument is that Robinson-Patman raises prices because it prohibits pro-competitive forms of price discrimination. Brian Albrecht, chief economist at the International Center for Law & Economics and a prominent critic of Robinson-Patman, points to a 1977 report from the Department of Justice, in which business executives and economists testified that suppliers might use price discrimination to compete against one another by offering discounts to secure better distribution through a desirable retailer, or offering geographically targeted discounts to break into a new market. Price discrimination “is part of the competitive process,” Albrecht told the Monthly. “If you want to blunt that by saying you basically have to offer everyone the exact same structure, you’re blunting competition, which ultimately would hurt consumers.”