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The High Benefit of Low Prices

Economic & Fiscal Policy

by William L. Anderson, Ph.D.

MARYLAND POLICY REPORT

FEBRUARY 23, 2006 pdf PDF VERSION Bookmark and Share

Imagine a scenario: The U.S. economy faces a dire threat from a low-price retail chain. If permitted to continue, the growth of this store and others like it would sap the economy of its strength, causing thousands of smaller competitors to close, creating unemployment, and robbing people of their wealth. In response to this looming danger, lawmakers pass legislation aimed at protecting Americans from the “high cost of low prices.”


Sound familiar? The year was 1936, the legislation was the Robinson-Patman Act, and the company that supposedly was ready to “swallow” the United States was the Atlantic and Pacific Tea Company, better known as A&P. In retrospect, such fears seem almost comical, given that A&P, while still a viable firm, hardly is a major player among retailers these days.

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