Resale Price Maintenance and the Service Argument (in the Book Trade)
AbstractThe paper introduces a specification of the demand side which allows RPM to have different effects on prices and on service, which may increase or decrease due to RPM. A feature of the model which deviates from those found in the literature is due to the introduction of a class of consumers who do not search but decide on a purchase spontaneously. More interestingly social welfare is reduced by RPM (at least locally) exactly under those circumstances where RPM induces higher service (and price). Hence, welfare decreases exactly in the case which was frequently presented for the justification of RPM to promote service. --
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Bibliographic InfoPaper provided by University of Würzburg, Chair for Monetary Policy and International Economics in its series W.E.P. - Würzburg Economic Papers with number 53.
Date of creation: 2004
Date of revision:
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resale price maintenance; service; welfare;
Find related papers by JEL classification:
- L42 - Industrial Organization - - Antitrust Issues and Policies - - - Vertical Restraints; Resale Price Maintenance; Quantity Discounts
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
- D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
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