Exclusionary Minimum Resale Price Maintenance
47 Pages Posted: 6 Dec 2010 Last revised: 6 Apr 2023
There are 2 versions of this paper
Exclusionary Minimum Resale Price Maintenance
Date Written: December 2010
Abstract
An upstream manufacturer can use minimum retail price maintenance (RPM) to exclude potential competitors. RPM lets the incumbent manufacturer transfer profits to retailers. If entry is accommodated, upstream competition leads to fierce down- stream competition and the breakdown of RPM. Hence, via RPM, retailers internalize the effect of accommodating entry on the incumbent's profits. Retailers may prefer not to accommodate entry; and, if entry requires downstream accommodation, entry can be deterred. We investigate when an incumbent would prefer to exclude, rather than collude with, the entrant and the effect of a retailer cartel. We also consider the effect of imperfect competition. Empirical and policy implications are discussed.
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
By Janusz A. Ordover and Greg Shaffer
-
The Economics of Resale Price Maintenance
By Kenneth G. Elzinga and David E. Mills
-
Robust Exclusion through Loyalty Discounts with Buyer Commitment
-
The Agency and Wholesale Models in Electronic Content Markets
-
RPM as Exclusion: Did the U.S. Supreme Court Stumble Upon the Missing Theory of Harm?
By Tim Brennan