| This paper presents a unique empirical analysis of Salop and Scheffmans raising rivals cost theory of predation. The cost efficiency of cooperative wholesaling organizations including the nations largest, Wakefern Food Corporation, are highly susceptible to throughput volume. The Royal Ahold/Pathmark offer to purchase Wakeferns largest member via a bankruptcy proceeding that attempted to supercede its membership contract, if consummated, would have reduced Wakeferns volume by 13 percent. It also would have triggered a domino effect of other member exits because it would have raised the costs of supplying remaining members. This report marshals the available empirical evidence to demonstrate that the predatory move by Royal Ahold and Pathmark would most... |
