Applying the rule of reason to maximum resale price fixing: Albrecht

The imposition and social welfare consequences of maximum resale price fixing are analyzed when there is successive monopoly and a non-contractible service is provided downstream. An elasticity condition that weighs maximum resale price fixing's opposing effects on quantity, through the effects on final price and service provision, determines whether it is adopted. Wholesale price is increased along with the practice of resale price fixing, and the net effects on quantity and social welfare are ambiguous. This points to an output test and a rule of reason in the antitrust evaluation of this practice, consistent with the Supreme Court's overruling of Albrecht.