Two Tales on Resale

Felix Höffler and Klaus Schmidt ()

Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems from Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich

Abstract: In some markets vertically integrated firms sell directly to final customers hut also to independent downstream firms with whom they then compete on the downstream market. It is often argued that resellers intensify competition and benefit consumers, in particular when wholesale prices are regulated. However, we show that (i) resale may increase prices and make consumers worse off and that (ii) standard "retail minus X regulation" may increase prices and harm consumers. Our analysis suggests that this is more likely if the number of integrated firms is small, the degree of product differentiation is low, and/or if competition is spatial.

Keywords: Resale regulation; wholesale; spatial product differentiation; non-spatial product differentiation; vertical restraints (search for similar items in EconPapers)
JEL-codes: D43 L11 L42 L51 (search for similar items in EconPapers)
Date: 2007-03
New Economics Papers: this item is included in nep-com, nep-ind, nep-mic and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Related works:
Journal Article: Two tales on resale (2008)
Working Paper: Two tales on resale (2008)
Working Paper: Two Tales on Resale (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:trf:wpaper:198

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