A rationale for the “meeting competition defense” under primary-line injury

This paper finds that price discrimination tends to enhance social welfare under oligopoly when the number of firms in the strong market is higher than in the weak market. As a result, we obtain a fundamental justification for the “meeting competition” defense (MCD) under the Robinson-Patman Act (RPA): In cases of primary-line injury, when the strong market is more competitive than the weak market, the use of MCD may allow price discrimination to improve social welfare. This outcome holds true regardless of whether price discrimination occurs in the final good market or intermediate good market, and it is robust to the nature of competition.