Nonetheless, the FTC would have us believe that the largest toy retailer illegally pressured toy makers not to sell certain top sellers to discounters. The result of the alleged pressure would be to raise toy prices and reduce competition among toy retailers. Yet even in economic theory, only firms with a near-monopoly share of the market can successfully pressure suppliers to limit their sales to the competition. But this flies in the face of all common sense. Discount retailers represent the largest and fastest-growing segment of the national toy market.
Toy makers compete vigorously to expand their business with discounters.
Indeed, the firm is currently retrenching its operations, closing several stores, dropping several lines of toys and reducing its inventory. All of this sounds like healthy competition, not monopoly power. Such behavior might well be justified. Yet ceasing to advertise may shrink the overall market for their products. Other solutions come to mind.