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His essay analyzes the economic aspects of certain pricing policies pursued in the Detroit metropolitan area during the middle and late 1930's. It is something more than this, to be sure, for what the Standard Oil Company of Indiana did there has become the subject of important legal and economic controversy. Its pricing practices were attacked by the Federal Trade Commission under the Robinson-Patman Act of 1936, and this litigation has developed into a landmark case in the interpretation of that statute.' Therefore, while the principal purpose of this study is to evaluate one type of price discrimination, the study must also be something of a partial evaluation of the Robinson-Patman Act itself. In the interest of brevity and simplicity, it is desirable to dispense at the outset with the problem of Standard's cost defense. The Robinson-Patman act provides that systems under which different prices are charged to competing buyers can be defended by showing that the lower prices reflect cost savings. Standard Oil of Indiana attempted to justify its lower prices to four Detroit jobbers by showing that it cost at least one and one-half cents per gallon less to serve them than to serve its tank-wagon customers. Standard's various cost defenses failed to satisfy the Trial Examiner, the Federal Trade Commission, and the Courts. Standard's cost defense is an interesting and important subject in its own right, but its analysis is not essential to the present inquiry. This essay proposes to evaluate the economic effects of a practice condemned by law as tending to lessen competition or create a monopoly. For this purpose we may assume, with the Commission, that Standard's price concessions to its jobb~ers were not justified by reason of cost savings.

Price Discrimination and Competitive Effects: The Standard Oil of Indiana Case