Brand-specificity of pre-sale services and inter-brand competition with resale price maintenance

Se Hoon Bang and Yangsoo Jin

International Review of Law and Economics, 2015, vol. 43, issue C, 1-9

Abstract: We analyze the competitive effects of resale price maintenance (RPM) in circumstances in which multiple manufacturers use RPM and distributors have incentives to free-ride on other distributors’ pre-sale services, which can be specific to a manufacturer's brand to some extent. In the antitrust literature and practices, RPM solving the free-rider problem is perceived mostly as pro-competitive, while multiple manufacturers’ RPM is perceived as anti-competitive based on their collusive incentives. In our circumstances, distributors’ services may differentiate manufacturers’ brands ex post, as is desired by manufacturers. Thus, despite solving the free-rider problem, multiple manufacturers’ RPM may harm consumers by softening inter-brand price competition.

Keywords: Resale price maintenance; Brand-specific services; Antitrust policy (search for similar items in EconPapers)
JEL-codes: K21 L42 (search for similar items in EconPapers)
Date: 2015
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Persistent link: https://EconPapers.repec.org/RePEc:eee:irlaec:v:43:y:2015:i:c:p:1-9

DOI: 10.1016/j.irle.2015.02.006

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