Price Discrimination and the Robinson-Patman Act
Required:
For each of the following situations, determine whether or not price discrimination has occurred and whether the Robinson-Patman Act has been violated.
1. Albion Shoes manufactures and sells shoes to retail outlets. A popular women’s flat sells for $15 to all customers, FOB shipping from Albion’s factory in Menomenee Falls.
2. Dr. Sidney Ferris, an orthopedic surgeon, charges $1,500 for arthroscopic knee surgery to privately insured patients. He charges a greatly reduced rate to other patients.
3. Castle Cosmetics charges a single price for each of its products to all customers, even though Castle can document that it costs up to three times as much to sell and distribute to certain small boutiques.
4. Paxton, Inc., manufactures toothpaste and mouthwash. Paxton charges a higher price to individual drugstores than to large chains because smaller stores do not have the same purchasing power as larger chains.