Retailer Heterogeneity, Intra-Brand Competition and Social Welfare
AbstractThis paper considers a model where a manufacturer sells its product to consumers through competitive retailers who are heterogeneous in marginal distribution costs and geographic locations. We study the welfare implications of resale price maintenance (RPM), which eliminates the intra-brand competition. We show that with RPM, the manufacturer can make more profit at the cost of the consumers. RPM helps the high-cost retailers to stay competitive in the market, and therefore increases the total distribution cost of the society. We suggest that antitrust authorities should be concerned when intra-brand competition is lessened. Copyright Springer Science + Business Media, Inc. 2005
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by Springer in its journal Journal of Industry, Competition and Trade.
Volume (Year): 5 (2005)
Issue (Month): 2 (June)
Contact details of provider:
Web page: http://springerlink.metapress.com/link.asp?id=105724
retailer heterogeneity; intra-brand competition; resale price maintenance; social welfare;
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Mueller, Willard F & Geithman, Frederick E, 1991. "An Empirical Test of the Free Rider and Market Power Hypotheses," The Review of Economics and Statistics, MIT Press, vol. 73(2), pages 301-08, May.
- Bittlingmayer, George, 1983. "A Model of Vertical Restriction and Equilibrium in Retailing," The Journal of Business, University of Chicago Press, vol. 56(4), pages 477-96, October.
- G.F. Mathewson & R.A. Winter, 1984. "An Economic Theory of Vertical Restraints," RAND Journal of Economics, The RAND Corporation, vol. 15(1), pages 27-38, Spring.
- Howard P. Marvel & Raymond Deneckere & James Peck, 1995.
"Demand Uncertainty and Price Maintainance: Markdowns as Destructive Competition,"
018, Ohio State University, Department of Economics.
- Deneckere, Raymond & Marvel, Howard P & Peck, James, 1997. "Demand Uncertainty and Price Maintenance: Markdowns as Destructive Competition," American Economic Review, American Economic Association, vol. 87(4), pages 619-41, September.
- Mathewson, G F & Winter, R A, 1983. "The Incentives for Resale Price Maintenance under Imperfect Information," Economic Inquiry, Western Economic Association International, vol. 21(3), pages 337-48, July.
- repec:att:wimass:9507 is not listed on IDEAS
- Butz, David A, 1997. "Vertical Price Controls with Uncertain Demand," Journal of Law and Economics, University of Chicago Press, vol. 40(2), pages 433-59, October.
- Winter, Ralph A, 1993. "Vertical Control and Price versus Nonprice Competition," The Quarterly Journal of Economics, MIT Press, vol. 108(1), pages 61-76, February.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Guenther Eichhorn) or (Christopher F. Baum).
If references are entirely missing, you can add them using this form.