Abstract

Although the Robinson-Patman Act was passed some three decades ago, problems regarding its enforcement continue to plague both the business community and the United States Federal Trade Commission. Some analysts have been particularly unhappy about the activities of the enforcement agencies with regard to small business. This article deals with just one segment of the Robinson-Patman Act, namely, the economic effects on the small retailer of quality goods of disproportionate advertising allowances to his larger competitors. A small store of this type is not rigorously defined, but in general it would be an independent store which sells quality merchandise at high mark-ups and emphasizes service as a major component of its merchandising mix. The competitive effect on the small store of disproportionate advertising allowances to larger stores would be considered one of the secondary line effects of discrimination. No attempt is made in this article to consider the competitive effects of receiving such allowances on other small stores, discount houses, or other large retailers. Nor is any consideration made of the effect on the customers of the stores or on other vendors.