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The Role of Price Floor in a Differentiated Product Retail Market

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  • Barna Bako

    ()
    (Faculty of Economics, Corvinus University of Budapest, Fovám tér 8, Budapest, 1093, Hungary)

Abstract

The ability of a manufacturer to enhance competition among its retailers by im- posing a price oor was recently introduced in the literature. The purpose of this article is to revisit this anti-collusive explanation of the retail price maintenance in a more general model in which we introduce asymmetric retailers. We nd that a manufacturer can amplify the retail market's competition by imposing a price oor when retailers sell di erentiated products. This result contradicts the prevailing concept of retail price maintenance.

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Bibliographic Info

Article provided by Queensland University of Technology (QUT), School of Economics and Finance in its journal Economic Analysis and Policy (EAP).

Volume (Year): 40 (2010)
Issue (Month): 3 (December)
Pages: 363-368

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Handle: RePEc:eap:articl:v:40:y:2010:i:3:p:363-368

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Keywords: Retail price maintenance; Price floor; Collusion;

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