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Resale Price Maintenance And Interlocking Relationships

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  • PATRICK REY
  • THIBAUD VERGÉ

Abstract

An often expressed idea to motivate the per se illegality of RPM is that it can limit interbrandas well as intrabrand competition. This paper analyzes this argument in a context where manufacturersand retailers enter into “interlocking relationships”, that is, when rival manufacturersdistribute their products through the same competing retailers. It is shown that, even as part ofpurely bilateral vertical contracts, RPM indeed limits the exercise of both inter- and intra-brandcompetition and can generate industry-wide monopoly pricing. The final impact on prices dependson the extent of potential competition at either level as well as on the manufacturers’ andretailers’ influence in determining the terms of the contracts. Our analysis sheds a new light onongoing legal developments and is supported by recent empirical studies.

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Bibliographic Info

Article provided by Wiley Blackwell in its journal The Journal of Industrial Economics.

Volume (Year): 58 (2010)
Issue (Month): 4 (December)
Pages: 928-961

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Handle: RePEc:bla:jindec:v:58:y:2010:i:4:p:928-961

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Cited by:
  1. Zhijun Chen & Patrick Rey, 2010. "Loss Leading as an Exploitative Practice," Working Papers hal-00540724, HAL.
  2. Haucap, Justus & Heimeshoff, Ulrich & Klein, Gordon J. & Rickert, Dennis & Wey, Christian, 2013. "Wettbewerbsprobleme im Lebensmitteleinzelhandel," DICE Ordnungspolitische Perspektiven 48, Heinrich‐Heine‐Universität Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
  3. Hiroshi Kitamura & Noriaki Matsushima & Misato Sato, 2013. "How Does Downstream Firms' Efficiency Affect Exclusive Supply Agreements?," ISER Discussion Paper 0878, Institute of Social and Economic Research, Osaka University.
  4. Gaudin, Germain & White, Alexander, 2014. "On the antitrust economics of the electronic books industry," DICE Discussion Papers 147, Heinrich‐Heine‐Universität Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
  5. Haucap, Justus & Klein, Gordon J., 2012. "Einschränkungen der Preisgestaltung im Einzelhandel aus wettbewerbsökonomischer Perspektive," DICE Ordnungspolitische Perspektiven 22, Heinrich‐Heine‐Universität Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
  6. Dubois, Pierre & Jodar-Rosell, Sandra, 2010. "Price and Brand Competition between Differentiated Retailers: A Structural Econometric Model," TSE Working Papers 10-159, Toulouse School of Economics (TSE).
  7. Bonnet, Céline & Réquillart, Vincent, 2011. "Tax incidence with strategic firms on the soft drink market," TSE Working Papers 11-233, Toulouse School of Economics (TSE), revised Jul 2012.
  8. John Asker & Heski Bar-Isaac, 2010. "Exclusionary Minimum Resale Price Maintenance," NBER Working Papers 16564, National Bureau of Economic Research, Inc.
  9. Noriaki Matsushima & Akira Miyaoka, 2013. "Who benefits from resale-below-cost laws?," ISER Discussion Paper 0875, Institute of Social and Economic Research, Osaka University.
  10. Gabrielsen, Tommy Staahl & Johansen, Bjørn Olav, 2013. "Resale Price Maintenance And Up-Front Payments: Achieving Horizontal Control Under Seller And Buyer Power," Working Papers in Economics 02/13, University of Bergen, Department of Economics.
  11. Carlos Noton & Andrés Elberg, 2013. "Revealing Bargaining Power through Actual Wholesale Prices," Documentos de Trabajo 304, Centro de Economía Aplicada, Universidad de Chile.
  12. John Asker & Heski Bar-Isaac, 2012. "Vertical Practices Facilitating Exclusion," Working Papers 12-20, New York University, Leonard N. Stern School of Business, Department of Economics.
  13. Gabrielsen, Tommy Staahl & Johansen, Bjørn Olav, 2012. "Buyer power and exclusion in vertically related markets," Working Papers in Economics 01/12, University of Bergen, Department of Economics.
  14. Adachi, Takanori & Ebina, Takeshi, 2014. "Double marginalization and cost pass-through: Weyl–Fabinger and Cowan meet Spengler and Bresnahan–Reiss," Economics Letters, Elsevier, vol. 122(2), pages 170-175.
  15. Tarcisio da Graca & Robert Masson, 2013. "Flawed Economic Models have Misled RPM Policy in the US, Canada and the EU," RePAd Working Paper Series UQO-DSA-wp042013, Département des sciences administratives, UQO.

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