Loss-leaders Banning Laws as Vertical Restraints
AbstractThis paper explores the indirect in‡ationary mechanism allowed byloss leaders banning laws. In a model where a monopolist producer sells his productthrough vertically separated and di¤erentiated retailers, we show that the ban of resaleat a loss can be used strategically by the producer to increase his wholesale price andpay the retailers through negotiated listing fees, thus raising his pro…t. The ban turnswholesale prices into ‡oor prices, thus increasing resale price and lessening consumers’welfare. These results are robust if the listing fees are two-part tari¤.
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Bibliographic InfoPaper provided by Centre de Recherche en Economie et Statistique in its series Working Papers with number 2004-19.
Date of creation: 2004
Date of revision:
Other versions of this item:
- Allain Marie-Laure & Chambolle Claire, 2005. "Loss-Leaders Banning Laws as Vertical Restraints," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 3(1), pages 1-25, February.
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