Vertical Information Restraints: Pro- and Anti-Competitive Impacts of Minimum Advertised Price Restrictions / 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. w22771.

NBER working paper series no. w22771

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Vertical Information Restraints

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2016.

Summary:

We consider vertical contracts where the retail market may involve search frictions. Minimum advertised price restrictions (MAP) act as a restraint on customers' information and so can increase search frictions in the retail sector. Such restraints, thereby, soften retail competition--an impact also generated by resale price maintenance (RPM). However, by accommodating (consumer or retailer) heterogeneity, MAP can allow for higher manufacturer profits than RPM. We show that they can do so through facilitating price discrimination among consumers; encouraging service provision; and facilitating manufacturer collusion. Thus, welfare effects may be positive or negative compared to RPM or to the absence of such restrictions.

Notes:

Print version record

October 2016.