The Role of Price Floor in a Differentiated Product Retail Market

Barna Bakó

Economic Analysis and Policy, 2010, vol. 40, issue 3, 363-368

Abstract: The ability of a manufacturer to enhance competition among its retailers by im- posing a price oor was recently introduced in the literature. The purpose of this article is to revisit this anti-collusive explanation of the retail price maintenance in a more general model in which we introduce asymmetric retailers. We nd that a manufacturer can amplify the retail market's competition by imposing a price oor when retailers sell di erentiated products. This result contradicts the prevailing concept of retail price maintenance.

Keywords: Retail price maintenance; Price floor; Collusion (search for similar items in EconPapers)
JEL-codes: C61 D43 K21 L41 (search for similar items in EconPapers)
Date: 2010
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