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The Tax Theory in Conditional Pricing Analysis

BY | September 9, 2019

By Jonathan M. Jacobson Some commentators and courts have advocated or applied the so-called “tax theory” to antitrust law evaluations of bundled or loyalty discount problems. Under that approach, discounts…

By Jonathan M. Jacobson

Some commentators and courts have advocated or applied the so-called “tax theory” to antitrust law evaluations of bundled or loyalty discount problems. Under that approach, discounts the customer must forego if it patronizes a rival are considered a “tax” on the rival because the rival will have to offset the lost discount revenue to make the sale. Proponents view this as a type of raising rivals’ costs. This paper argues that the tax theory is misguided and sho

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