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The Competitive Effects of Resale Price Maintenance

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  • Thomas W. Gilligan

Abstract

Resale price maintenance (RPM) occurs when an upstream firm dictates pricing policies at subsequent stages of the distribution process. The allocative and productive effects of RPM are theoretically ambiguous, and existing empirical studies have not resolved the theoretical disputes. Utilizing the share price response of firms subject to antitrust challenges to RPM, the empirical analysis in this article indicates that this practice is used for a variety of reasons and produces a range of allocative and productive effects. The analysis also indicates that the structural characteristics of firms and industries that use RPM are important determinants of its effects. These results have implications for the theory of vertical control and for interpreting recommendations about the conduct of contemporary antitrust policy toward RPM.

Suggested Citation

  • Thomas W. Gilligan, 1986. "The Competitive Effects of Resale Price Maintenance," RAND Journal of Economics, The RAND Corporation, vol. 17(4), pages 544-556, Winter.
  • Handle: RePEc:rje:randje:v:17:y:1986:i:winter:p:544-556
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    Cited by:

    1. Bakó, Barna & Kálecz-Simon, András, 2012. "Vertikális korlátozások - növelik vagy csökkentik a jólétet?. Érvek az irodalomból
      [Vertical constraints - do they increase or reduce welfare?. Arguments in the literature]
      ," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(10), pages 1138-1159.
    2. Emanuele Giovannetti & Laura Magazzini, 2013. "Resale Price Maintenance: An Empirical Analysis of UK Firms' Compliance," Economic Journal, Royal Economic Society, vol. 123(11), pages 582-595, November.
    3. David Andrés Camargo Mayorga & Johan Ricardo Páez Castillo & Ángel David Roncancio García, 2010. "Consideraciones teóricas y empíricas acerca del Resale Price Maintenance," REVISTA FACULTAD DE CIENCIAS ECONÓMICAS, UNIVERSIDAD MILITAR NUEVA GRANADA, December.
    4. Xulia González, 2015. "Empirical Regularities in the Vertical Restraints of Manuacturing Firms," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 43(2), pages 181-194, June.
    5. Ippolito, Pauline M & Overstreet, Thomas R, Jr, 1996. "Resale Price Maintenance: An Economic Assessment of the Federal Trade Commission's Case against the Corning Glass Works," Journal of Law and Economics, University of Chicago Press, vol. 39(1), pages 285-328, April.
    6. Klein, Gordon J. & Günster, Andrea, 2013. "Enforcement of European Competition Policy - Impact on Competition and Efficiency," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79989, Verein für Socialpolitik / German Economic Association.
    7. Günster, Andrea & van Dijk, Mathijs, 2016. "The impact of European antitrust policy: Evidence from the stock market," International Review of Law and Economics, Elsevier, vol. 46(C), pages 20-33.
    8. Jürgen-Peter Kretschmer, 2014. "How to deal with resale price maintenance: What can we learn from empirical results?," European Journal of Law and Economics, Springer, vol. 38(2), pages 343-368, October.
    9. Cooper, James C. & Froeb, Luke M. & O'Brien, Dan & Vita, Michael G., 2005. "Vertical antitrust policy as a problem of inference," International Journal of Industrial Organization, Elsevier, vol. 23(7-8), pages 639-664, September.

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