Federal Trade Commission

Efficiencies Without Economists Federal Trade Commission

Resale price maintenance (RPM) continues to be a contentious topic, both in economics and in antitrust. During the 1980s economists derived new efficiency motivations for RPM while the Supreme Court reaffirmed the per se ban on its use and Congress threatened to extend that ban. While economists have proposed a number of different efficiency explanations for RPM, such theorizing has been performed largely without the help of businesses that actually use RPM. This book seeks to find out why businesses may believe they benefit from RPM by examining which efficiency rationales were advanced by firms during a critical time for RPM in the U. S., 1915 to 1917. This study finds that the efficiency explanations for RPM generated by modem economists are not new. Indeed, all of the prominent theories are replicated in various forms. While today's theories may appear unlikely to their critics, they were certainly real enough to businessmen over 70 years ago.