Do MSRPs decrease prices?

Babur De los Santos, In Kyung Kim and Dmitry Lubensky ()

International Journal of Industrial Organization, 2018, vol. 59, issue C, 429-457

Abstract: The nature of manufacturer’s suggested retail prices (MSRPs) and whether they increase or decrease prices is poorly understood. We exploit a policy experiment in which a ban on MSRPs was imposed and then lifted a year later, and show that MSRPs decrease prices by 3.6 percent on average. There is no indication that MSRPs lowered prices by acting as binding price ceilings. Instead we find suggestive evidence that MSRPs are aimed at consumers, possibly providing a benchmark by which consumers can evaluate prices.

Keywords: Recommended retail price; Vertical restraints; Resale price maintenance; Price caps (search for similar items in EconPapers)
JEL-codes: L11 L40 L81 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Working Paper: Do MSRPs Decrease Prices? (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:indorg:v:59:y:2018:i:c:p:429-457

DOI: 10.1016/j.ijindorg.2018.02.008

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