Anti-Competitive Effects of resale-Below-Cost Laws

Marie-Laure Allain and Claire Chambolle ()

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Abstract: We show that resale-below-cost laws enable producers to impose industry-wide price-floors to retailers. This mechanism suppresses downstream competition but also and more surprisingly dampens upstream competition, leading to higher prices and lower welfare. Price-floor may be more profitable for producers than resale price maintenance contracts and, when a resale price maintenance restraint may have ambiguous effect on welfare, price-floors are always welfare damaging. Retailers' buyer power appears as a key for a price-floor to work out.

Keywords: Price-floor; Resale Price Maintenance; Buyer Power; Competition (search for similar items in EconPapers)
Date: 2011
Note: View the original document on HAL open archive server: https://hal.science/hal-00367492v1
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Citations: View citations in EconPapers (24)

Published in International Journal of Industrial Organization, 2011, 29 (4), pp.373-385

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Related works:
Journal Article: Anti-competitive effects of resale-below-cost laws (2011)
Working Paper: Anti-competitive effects of resale-below-cost laws (2010)
Working Paper: Anti-Competitive Effects of Resale-Below-Cost Laws (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-00367492

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