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Resale Price Maintenance and the Service Argument (in the Book Trade)

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  • Schulz, Norbert

Abstract

The 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.

Suggested Citation

  • Schulz, Norbert, 2004. "Resale Price Maintenance and the Service Argument (in the Book Trade)," W.E.P. - Würzburg Economic Papers 53, University of Würzburg, Chair for Monetary Policy and International Economics.
  • Handle: RePEc:zbw:wuewep:53
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    File URL: https://www.econstor.eu/bitstream/10419/22346/1/wep53.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    resale price maintenance; service; welfare;

    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, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection

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