In 1984, Justice Brennan in his concurring opinion in Monsanto Co. Spray-Rite Svc. Corp., 465 U. 752 (1984) asserted that "[Dr. Miles Medical Co....

In 1984, Justice Brennan in his concurring opinion in Monsanto Co. v. Spray-Rite Svc. Corp., 465 U.S. 752 (1984) asserted that “[Dr. Miles Medical Co. v. John D. Park & Sons Co., 220 U.S. 373 (1911)] has stood for 73 years, and Congress has certainly been aware of its existence throughout that time. Yet Congress has never enacted legislation to overrule the interruption of the Sherman Act adopted in that case. Under the circumstances, I see no reason for us to depart from our longstanding interpretation of the Act. Because the Court adheres to that rule and, in my view, properly applies Dr. Miles to this case, I join the opinion and judgment of the Court.” The rule of law pronounced in the Dr. Miles case essentially provided that an agreement between buyers and sellers on the resale prices a seller would charge is a violation of Sherman Act. That is, resale price maintenance was per se illegal. In 2007, the U.S. Supreme Court in a 5 – 4 decision overturned its almost century long Dr. Miles precedent in Leegin Creative Leather Prods., Inc. PSKS, Inc., 127 S. Ct. 2705 (2007), which was not unexpected as the Supreme Court had been narrowing the reach of the Dr. Miles case. That is, resale price maintenance will be evaluated under a “rule of reason.” Immediately following the decision (also in 2007), Senator Kohl (D-Wis) introduced a bill (S. 2661) that would amend the Sherman Act to make all resale price maintenance illegal, which died in committee. Senator Kohl proposed a similar bill in 2009 (S. 148) and again in 2011 (S. 75), which was ultimately approved by the Senate Judiciary Committee, which he chaired. The bill was not passed by the Senate, even though the Democrats controlled a majority of seats (with 53) in the Senate (with two independents caucusing with the Democrats).

Use the spatial model to portray the above situation and explain whether or not the Supreme Court decision in the Leegin case is a structure induced equilibrium.