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Competitive Effects of Resale Price Maintenance Through Inventory: Evidence from Publishing Industry

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  • Kawaguchi, Kohei
  • Qiu, Jeff
  • Zhang, Yi

Abstract

This paper examines the competitive effects of resale price maintenance (RPM) through inventory decisions under demand uncertainty. We focus on the Japanese publishing industry where RPM is allowed. We develop and estimate a model of RPM in which price and inventory are determined before demand is realized. Counterfactual simulations show that the RPM model would yield a higher consumer surplus than a wholesale model due to a sufficient inventory and a lower price of new titles. Moreover, we show that the price ceiling due to RPM plays a welfare-enhancing role, whereas the price floor is irrelevant in the industry.

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  • Kawaguchi, Kohei & Qiu, Jeff & Zhang, Yi, 2022. "Competitive Effects of Resale Price Maintenance Through Inventory: Evidence from Publishing Industry," SocArXiv wma6p, Center for Open Science.
    • Handle: RePEc:osf:socarx:wma6p
    DOI: 10.31219/osf.io/wma6p
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    References listed on IDEAS

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