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Returns Policies and Retail Price Competition

Author

Listed:
  • V. Padmanabhan

    (INSEAD)

  • I.P.L. Png

    (National Univ. of Singapore)

Abstract

We show that returns policies do increase manufacturer profitability by attenuating price competition between retailers. This effect holds only in the presence of end-user demand uncertainty. The conditions under which a returns policy raises the manufacturer's profit are weaker when retailing is a duopoly than when retailing is a monopoly. This suggests that returns policies serve both to dampen competition and resolve demand uncertainty.

Suggested Citation

  • V. Padmanabhan & I.P.L. Png, 2004. "Returns Policies and Retail Price Competition," Industrial Organization 0401007, University Library of Munich, Germany.
    • Handle: RePEc:wpa:wuwpio:0401007
    Note: Type of Document - pdf; prepared on Windows-XP; pages: 15
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    File URL: https://econwpa.ub.uni-muenchen.de/econ-wp/io/papers/0401/0401007.pdf
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    References listed on IDEAS

    as
    1. Kandel, Eugene, 1996. "The Right to Return," Journal of Law and Economics, University of Chicago Press, vol. 39(1), pages 329-356, April.
    2. Marvel, Howard P & Peck, James, 1995. "Demand Uncertainty and Returns Policies," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 36(3), pages 691-714, August.
    3. V. Padmanabhan & I. P. L. Png, 1997. "Manufacturer's Return Policies and Retail Competition," Marketing Science, INFORMS, vol. 16(1), pages 81-94.
    4. Barry Alan Pasternack, 1985. "Optimal Pricing and Return Policies for Perishable Commodities," Marketing Science, INFORMS, vol. 4(2), pages 166-176.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    channels; competition; returns; pricing;
    All these keywords.

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • M30 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - General

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