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Selective price cuts or competitive practices? The paradoxes of the RDB case

  • Abstract

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Keywords: Selective price cuts. Double Sourcing. Abuse of Dominant Position

In this paper we propose an economic approach to article 82 based on the construction of an identification test: comparing an anticompetitive and a competitive explanation of a given market situation, we can derive the empirical implications of the two, selecting those factual elements that occur only under one of the two models. This subset of evidence allows therefore discriminating between the two explanations validating one of them. We apply this approach to a recent Italian case, involving RDB, a firm producing construction materials that was held responsible of selective price cuts. We compare the selective price cuts model and two competitive models based on decentralized price negotiation, deriving the associated empirical predictions. We show that the same evidence provided by the Authority in the final decision uniquely supports one of the two competitive models against the selective price cut explanation. By not constructing a proper identification test the Authority misinterprets the data collected, considering as partial evidence of the anticompetitive model what instead fully supports a competitive explanation of the market.

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