Pat's Pen Co.manufacturers and sells an inexpensive ball-point pen.Salley's Stationery purchases the pens for $.25 each in quantities of 1,000.Salley's discovers that a national chain,a competitor of Salley's,buys the pen at $.20 each for quantities of 1,000.If Salley's Stationery sues Pat's Pen Co.for price discrimination
A)Pat's Pen Co.will win if it can prove that it has been selling to the national chain continuously at the cheaper rate.
B)Pat's Pen Co.will win if it can prove that it did not intend to economically harm Salley's Stationery.
C)Salley's Stationery will win if it can prove price discrimination occurred and that it lessened competition.
D)Salley's Stationery will win since price discrimination is a per se violation with no real defenses.

Question

Quizplus · Accepted Answer

Salley's Stationery will win if it can prove price discrimination occurred and that it lessened competition. Price discrimination is illegal if it lessens competition in the market, and if Salley's can prove both elements, they will win the case. The fact that Pat's Pen Co. sold to a competitor at a lower price does not automatically make it legal unless there is a valid business justification for the price difference. The intent of Pat's Pen Co. is also not relevant in determining price discrimination.