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Two tales on resale

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Author Info
Höffler, Felix
Schmidt, Klaus M.
Abstract

In some markets vertically integrated firms sell directly to final customers but also to independent downstream firms with whom they then compete on the downstream market. It is often argued that resellers intensify competition and benefit consumers, in particular when wholesale prices are regulated. However, we show that (i) resale may increase prices and make consumers worse off and that (ii) standard "retail minus X regulation" may increase prices and harm consumers. Our analysis suggests that this is more likely if the number of integrated firms is small, the degree of product differentiation is low, and/or if competition is spatial.

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File URL: http://www.sciencedirect.com/science/article/B6V8P-4S03R95-1/2/665857105b7e502670b1a2fac6a40629
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Publisher Info
Article provided by Elsevier in its journal International Journal of Industrial Organization.

Volume (Year): 26 (2008)
Issue (Month): 6 (November)
Pages: 1448-1460
Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Handle: RePEc:eee:indorg:v:26:y:2008:i:6:p:1448-1460

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Web page: http://www.elsevier.com/locate/inca/505551

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Related research
Keywords: Resale regulation Wholesale Spatial product differentiation Non-spatial product differentiation Vertical restraints;

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  1. Michiel J. Bijlsma & Gijsbert T.J. Zwart, 2009. "Competition for Access: Spectrum Rights and Downstream Access in Wireless Telecommunications," CPB Discussion Papers 123, CPB Netherlands Bureau for Economic Policy Analysis. [Downloadable!]
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This page was last updated on 2009-12-3.


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