Resale price maintenance and restrictions on dominant firm and industry-wide adoption

Foros, Øystein, Kind, Hans Jarle and Shaffer, Greg (2011) Resale price maintenance and restrictions on dominant firm and industry-wide adoption. International Journal of Industrial Organization, 29. pp. 179-186. ISSN 0167-7187

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Abstract

We consider a model in which firms use resale price maintenance (RPM) to dampen competition. We find that even though the motive for using RPM is thus anti-competitive, market forces may limit the overall adverse impact on consumers. Indeed, we find that when there are a large number of firms in the market, consumer welfare under a laissez-faire policy might be as high or almost as high as it would be under an alternative policy in which RPM is banned. Government interventions that put an upper limit on the extent of industry-wide adoption of RPM can have adverse welfare effects in the model. We further show that proposed guidelines in the United States and Europe may come close to minimizing welfare.

Item Type:	Article
Faculty \ School:	Faculty of Social Sciences > Norwich Business School
UEA Research Groups:	Faculty of Social Sciences > Research Groups > Responsible Business Regulation Group
Depositing User:	Nicola Secker
Date Deposited:	01 Apr 2011 15:01
Last Modified:	17 Jan 2024 01:20
URI:	https://ueaeprints.uea.ac.uk/id/eprint/27879
DOI:	10.1016/j.ijindorg.2010.04.006

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