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
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Bibliographic InfoArticle provided by Springer in its journal Journal of Industry, Competition and Trade.
Volume (Year): 5 (2005)
Issue (Month): 2 (June)
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Web page: http://springerlink.metapress.com/link.asp?id=105724
retailer heterogeneity; intra-brand competition; resale price maintenance; social welfare;
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