Making Sense of Non-Binding Retail-Price Recommendations

Stefan Buehler and Dennis L. Gaertner ()
Additional contact information
Dennis L. Gaertner: Socioeconomic Institute, University of Zurich
Authors registered in the RePEc Author Service: Dennis L. Gärtner ()

No 902, SOI - Working Papers from Socioeconomic Institute - University of Zurich

Abstract: This paper provides a theoretical rationale for non-binding retail price recommendations (RPRs) in vertical supply relations. Analyzing a bilateral manufacturer-retailer relationship with repeated trade, we show that linear relational contracts can implement the surplus-maximizing outcome. If the manufacturer has private information about production costs or consumer demand, RPRs may serve as a communication device from manufacturer to retailer. We characterize the properties of efficient bilateral relational contracts with RPRs and discuss extensions to settings where consumer demand is affected by RPRs, and where there are multiple retailers or competing supply chains.

Keywords: vertical relationships; relational contracts; asymmetric information; price recommendations (search for similar items in EconPapers)
JEL-codes: D23 D43 L14 L15 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2009-02
New Economics Papers: this item is included in nep-com, nep-cta and nep-mkt
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.zora.uzh.ch/id/eprint/51914/1/wp0902.pdf first version, 2009 (application/pdf)

Related works:
Journal Article: Making Sense of Nonbinding Retail-Price Recommendations (2013)
Working Paper: Making Sense of Non-Binding Retail-Price Recommendations (2010)
Working Paper: Making Sense of Non-Binding Retail-Price Recommendations (2009)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:soz:wpaper:0902

Access Statistics for this paper

More papers in SOI - Working Papers from Socioeconomic Institute - University of Zurich Contact information at EDIRC.
Bibliographic data for series maintained by Severin Oswald ().