Loss leaders banning laws as vertical restraints
This paper explores the indirect inflationary mechanism allowed by loss leaders banning laws. In a model where a monopolist producer sells his product through vertically separated and differentiated retailers, we show that the ban of resale at a loss can be used strategically by the producer to increase his wholesale price and pay the retailers through negotiated listing fees, thus raising his profit. The ban turns wholesale prices into floor prices, thus increasing resale price and lessening consumers' welfare.
|Date of creation:||2007|
|Date of revision:|
|Publication status:||Published in Journal of Agricultural & Food Industrial Organization, 2007, 3 (1), pp.1092-1092|
|Note:||View the original document on HAL open archive server: https://hal.archives-ouvertes.fr/hal-00242935|
|Contact details of provider:|| Web page: https://hal.archives-ouvertes.fr/|
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