Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
7354975 | International Journal of Industrial Organization | 2018 | 48 Pages |
Abstract
In this article, we examine resale price maintenance (RPM) in a classic model of downstream retailers engaging in spatial price discrimination. We show that a resale price floor increases the total profit of the upstream monopoly when transport cost (product differentiation) is relatively low. Importantly, this profitable RPM floor can also enhance social welfare and even consumer surplus. A resale price ceiling can also be profitable and always improves consumer surplus and social welfare. We argue that such findings support a rule of reason approach to RPM.
Related Topics
Social Sciences and Humanities
Economics, Econometrics and Finance
Economics and Econometrics
Authors
John S. Heywood, Wang Shiqiang, Ye Guangliang,