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Delegated Sales, Agency Costs and the Competitive Effects of List Price

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Abstract

We propose a simple agency framework in which although competing producers always find it optimal to share information about their list (undiscounted) prices, consumers are not necessarily harmed by these agreements. In particular, when sales are delegated to self-interested parties (such as salesmen or retailers), we find that expected discounts are higher with than without information sharing if and only if agency costs are sufficiently low. This shows that agreements according to which firms disclose list prices to their competitors should be presumed neither as anti-competitive nor as pro-competitive.

Suggested Citation

  • Enrique Andreu & Damien Neven & Salvatore Piccolo, 2020. "Delegated Sales, Agency Costs and the Competitive Effects of List Price," CSEF Working Papers 573, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
  • Handle: RePEc:sef:csefwp:573
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    File URL: http://www.csef.it/WP/wp573.pdf
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    Keywords

    Agency Costs; Consumer Welfare; Information Sharing; List Prices;

    JEL classification:

    • L42 - Industrial Organization - - Antitrust Issues and Policies - - - Vertical Restraints; Resale Price Maintenance; Quantity Discounts
    • L50 - Industrial Organization - - Regulation and Industrial Policy - - - General
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce

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