The Effects of Resale Price Maintenance on Shareholder Wealth: The Consequences of Schwegmann

Philip L Hersch

Journal of Industrial Economics, 1994, vol. 42, issue 2, 205-16

Abstract: Event study methodology is used to assess the effects of the 1951 U.S. Supreme Court Schwegmann decision, which severely weakened the enforcement of resale price maintenance contracts in the United States. Overall, upstream industries with heavy resale price maintenance usage apparently were not adversely affected by the decision. Among large retailing groups, a positive effect of the decision was found for department stores. Cross-section tests of the motives for the adoption of resale price maintenance provide support for hypotheses based on free-ridership, dealer cartels, and, to a lesser extent, protection of product reputation. Copyright 1994 by Blackwell Publishing Ltd.

Date: 1994
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