Raising Retailers' Profits: On Vertical Practices and the Exclusion of Rivals
John Asker and
Heski Bar-Isaac ()
American Economic Review, 2014, vol. 104, issue 2, 672-86
Resale price maintenance (RPM), slotting fees, loyalty rebates, and other related vertical practices can allow an incumbent manufacturer to transfer profits to retailers. If these retailers were to accommodate entry, upstream competition could lead to lower industry profits and the breakdown of these profit transfers. Thus, in equilibrium, retailers can internalize the effect of accommodating entry on the incumbent's profits. Consequently, if entry requires downstream accommodation, entry can be deterred. We discuss policy implications of this aspect of vertical contracting practices.
JEL-codes: L14 L22 L25 L42 L81 (search for similar items in EconPapers)
Note: DOI: 10.1257/aer.104.2.672
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (46) Track citations by RSS feed
Downloads: (external link)
Access to full text is restricted to AEA members and institutional subscribers.
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:aea:aecrev:v:104:y:2014:i:2:p:672-86
Ordering information: This journal article can be ordered from
Access Statistics for this article
American Economic Review is currently edited by Esther Duflo
More articles in American Economic Review from American Economic Association Contact information at EDIRC.
Bibliographic data for series maintained by Michael P. Albert ().