Abstract
We investigate the incentives of two manufacturers with common retailers to use resale price maintenance (RPM). Retailers provide product‐specific services that increase demand and manufacturers use minimum RPM to compete for favorable retail services for their products. Minimum RPM increases consumer prices and can create a prisoner's dilemma for manufacturers without increasing, and possibly even reducing, the overall level of retail services. If manufacturer market power is asymmetric, minimum RPM may distort the allocation of services toward the high‐priced products of the manufacturer with more market power. These results challenge the service argument as an efficiency defense for minimum RPM.
| Original language | English |
|---|---|
| Pages (from-to) | 3-23 |
| Number of pages | 21 |
| Journal | The RAND Journal of Economics |
| Volume | 48 |
| Issue number | 1 |
| DOIs | |
| Publication status | Published - Feb 2017 |
Fields of science
- 303010 Health economics
- 502 Economics
- 502002 Labour economics
- 502009 Corporate finance
- 502021 Microeconomics
- 502042 Environmental economics
- 502047 Economic theory
- 504014 Gender studies
- 507016 Regional economy
- 405002 Agricultural economics
- 502001 Labour market policy
- 502003 Foreign trade
- 502010 Public finance
- 502012 Industrial management
- 502013 Industrial economics
- 502018 Macroeconomics
- 502020 Market research
- 502025 Econometrics
- 502027 Political economy
- 502039 Structural policy
- 502046 Economic policy
- 506004 European integration
JKU Focus areas
- Social Systems, Markets and Welfare States
- Social and Economic Sciences (in general)