ECON 101: How the Robinson-Patman Act Raises Prices

Sean Heather
Senior Vice President, International Regulatory Affairs & Antitrust, U.S. Chamber of Commerce

Published

March 20, 2026

Consider the following scenario:

A company produces and sells 5,000 units of a consumer product across three different distribution channels. The company offers discounts and works with the retailer within each distribution channel to negotiate store specific marketing and promotional support from each retailer. Such support is valuable to the company as it allows them to reduce marketing and promotional costs that they would otherwise incur. This is what the pricing strategy looks like in the market:

Channel 1: A large national retailer buys 3,000 units at $10 each for $30,000.
Channel 2: A mid-sized retailer buys 1,500 units at $12 each for $18,000.
Channel 3: A small retailer buys 500 units at $15 each for $7,500.

Total sales: $55,500

Because strict enforcement of the Robinson-Patman Act prohibits price discrimination, the company wants to avoid costly investigations and legal headaches. As a result, the company has decided to sell its product at the same price across all three channels. But the law importantly does not require the company to sell at the lowest price possible or cap the price that can be charged, nor should it—price controls invariably reduce the incentive of producers to supply goods, thereby causing shortages and reducing product quality.

So, instead of offering all retailers its previous lowest price, the company is just as likely to price its consumer product at a higher price point. Overall, the net effect is consumers pay more.

Here’s the breakdown if the new price is $12:

Channel 1: The large national retailer, which previously benefited from volume discounts, now pays $12 per unit. This increases their costs, and they are likely to pass those costs on in the form of higher prices on to their consumers. New sales: 3,000 units x $12 = $36,000.
Channel 2: Mid-sized retailers see no change. New sales: 1,500 units x $12 = $18,000.
Channel 3: Small retailers benefit from a price reduction, and they may pass that benefit on to their consumers. New sales: 500 units x $12 = $6,000.

Total Sales: $60,000

In this scenario, more consumers are buying from a store where the price went up than the handful of consumers that benefited. The net effect is that the consumer on a whole pays $4,500 more overall to the benefit of the company. This is why Robinson-Patman enforcement is inflationary, raising rather than lowering prices across the economy.

This is a simple scenario. The real-world impact of the Act’s enforcement will be dynamic effects that could be even more profound, causing company costs to rise and supply levels to fall, and putting even more upward pressure on the price consumers ultimately pay.

These and other factors are likely to result in the company selling into the market at a new price point, one not previously used, perhaps even higher than $12. The reality is that pricing strategies used by companies are complex, and advocates for Robinson-Patman enforcement fail to appreciate the dynamism of the market. Instead, they want you to believe that prices will magically fall and that consumers will be universally always better off.

While the Act purports to ensure fairness in pricing, experience with its enforcement has led to unintended consequences. By eliminating volume discounts and pricing flexibility to consider other factors like marketing support, the Robinson-Patman Act only serves to reduce efficiency, increase costs, and ultimately harms consumers through higher prices and reduced choices.