Resale Price Maintenance: Output Increasing or Restricting? The Case of Distilled Spirits in the United States

Stanley I Ornstein and Dominique M Hanssens

Journal of Industrial Economics, 1987, vol. 36, issue 1, 1-18

Abstract: Theories of resale price maintenance (RPM) differ strongly on the pro- and a nti-competitive effects on RPM. There are few tests of the welfare ga ins or losses from RPM in industry case studies. This paper tests RPM 's welfare effects in the retail sale of distilled spirits in the U.S Using regression analysis to estimate demand, comparing liquor stor e license values over time, and analyzing political contributions, th e study finds that efficiency arguments for RPM are unsupported, with RPM leading to a reduction in distilled spirits consumption. Evidenc e shows substantial wealth transfers from consumers to retail liquor store owners due to RPM. Copyright 1987 by Blackwell Publishing Ltd.

Date: 1987
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