Robinson-Patman Curtailments on Distribution Innovation: A Status Sought for Functional Discounts

Abstract

The increasingly complex character of American economy has created powerful incentives for new methods of distribution and marketing. First, as costs of distribution become a more significant part of total costs, producers seek the economic advantages of more efficient distributive methods. In other instances, new marketing techniques—combining distributive services with the supply of goods—have become important competitive devices. Since many of the new methods adopted are, on their face, similar to those used to establish monopolies or other market controlling combinations, it has been difficult to determine whether an attempted change in market structure would benefit consumers by lowering distribution costs or harm them by obstructing competition. In addition, substantial policy considerations have been advanced in opposition to any change which harms small competitors, even though the harm they suffer might be attributed to their inability to improve their own efficiency. To accommodate these goals—seeking greater efficiency, protecting competitors, and preserving competition—Congress enacted the Robinson- Patman Act, but instead of resolving these conflicts the act seems only to have added questions concerning its meaning.