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Abstract

This note examines vertical restraints on trade, which involves an agreement between firms at "successive stages of the distribution system. It specifically analyzes the effect of vertically imposed dealer-location clauses on competition and consumers and discusses whether such restraints are per se violations under Section 1 of the Sherman Act or whether they require analysis under the rule of reason. The note suggests that an absolute per se rule against all post-sale vertical restraints is overly broad and unjustified and calls for a more result-oriented approach in dealing with less offensive restraints on trade.

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