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Vertical Restraints that Enable Price Discrimination

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In e-commerce, we witness the growing use of personalized pricing—the practice of market segmentation so that each and every consumer pays an individual price for the same exact product. According to some scholars, personalized pricing can have detrimental distributive effects on the economy. Personalized pricing rests, inter alia, on consumers’ inability to arbitrage and thereby cause price convergence. This research focuses on vertical restraints that enable firms to eliminate consumers’ ability to arbitrage and suggests increasing antitrust scrutiny of these practices by considering personalized pricing as an anti-competitive effect weighing against vertical restraints in the rule of reason analysis in which these restraints are reviewed. This research thereby adds to the literature by offering a practical method to potentially restrain personalized pricing outside the realm of price discrimination as abuse of dominance.