Anti-competitive effects of resale-below-cost laws

Marie-Laure Allain and Claire Chambolle

International Journal of Industrial Organization, 2011, vol. 29, issue 4, 373-385

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

Keywords: Price-floor; Resale; price; maintenance; Buyer; power; Competition (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (24)

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Related works:
Working Paper: 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:eee:indorg:v:29:y:2011:i:4:p:373-385

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