Exclusionary Minimum Resale Price Maintenance / John Asker, Heski Bar-Isaac.

Format:

Book

Author/Creator:

Asker, John.

Contributor:

National Bureau of Economic Research.

Bar-Isaac, Heski.

Series:

Working Paper Series (National Bureau of Economic Research) no. w16564.

NBER working paper series no. w16564

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2010.

Summary:

An upstream manufacturer can use minimum retail price maintenance (RPM) to exclude potential competitors. RPM lets the incumbent manufacturer transfer profits to retailers. If entry is accommodated, upstream competition leads to fierce down- stream competition and the breakdown of RPM. Hence, via RPM, retailers internalize the effect of accommodating entry on the incumbent's profits. Retailers may prefer not to accommodate entry; and, if entry requires downstream accommodation, entry can be deterred. We investigate when an incumbent would prefer to exclude, rather than collude with, the entrant and the effect of a retailer cartel. We also consider the effect of imperfect competition. Empirical and policy implications are discussed.

Notes:

Print version record

December 2010.