Returns Policies and Retail Price Competition

V. Padmanabhan and Ivan P.L. Png
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V. Padmanabhan: INSEAD

Industrial Organization from EconWPA

Abstract: We show that returns policies do increase manufacturer profitability by attenuating price competition between retailers. This effect holds only in the presence of end-user demand uncertainty. The conditions under which a returns policy raises the manufacturer's profit are weaker when retailing is a duopoly than when retailing is a monopoly. This suggests that returns policies serve both to dampen competition and resolve demand uncertainty.

Keywords: channels; competition; returns; pricing (search for similar items in EconPapers)
JEL-codes: D43 D83 L13 M30 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com, nep-ind and nep-mic
Date: 2004-01-25
Note: Type of Document - pdf; prepared on Windows-XP; pages: 15
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Persistent link: http://EconPapers.repec.org/RePEc:wpa:wuwpio:0401007

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