Does the Per Se Rule Deter Vertical Price-Fixing?

David A Butz

Economic Inquiry, 1996, vol. 34, issue 4, 770-80

Abstract: Manufacturers can easily circumvent legal restrictions on resale price maintenance. They can coordinate and finance their retailers' meet-the-competition price guarantees and guarantee the margins of retailers damaged by price-cutting rivals. Or they can offer various other rewards to outlets that do not discount. Hence, no retailer wants to discount first and, in equilibrium, all charge the 'suggested' resale price. Antitrust enforcers who want to prevent manufacturers from controlling resale prices would need to scrutinize the whole range of transfers between manufacturers and retailers. Unfortunately, doing so could state essential services and penalize innocent firms. Copyright 1996 by Oxford University Press.

Date: 1996
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