The legal 'meeting-competition' defense, which allows companies to match a competitor's price, actually harms consumers and reduces overall economic welfare.
April 1, 2026
Original Paper
Meeting Competition, Losing Welfare: Input Price Discrimination under Asymmetric Upstream Competition
SSRN · 6507101
The Takeaway
Standard legal and economic logic suggests that allowing firms to lower prices to match competitors is inherently pro-competitive. This paper reveals that in markets with asymmetric competition, this defense facilitates price discrimination that ultimately lowers total output and reduces consumer surplus.
From the abstract
We examine the welfare effects of the Robinson–Patman Act’s meeting-competition defense in a secondary-line setting. In a successive-oligopoly model, a multi-market input supplier serves two input markets with different competitive intensity, while two downstream firms compete in a final-good market and each sources from a different input market. Relative to uniform-pricing, discriminatory input pricing reduces total downstream output whenever upstream competitive pressure differs across markets