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Anti-Competitive Effects of Resale-Below-Cost Laws

Marie-Laure Allain () and Claire Chambolle ()

No 2007-29, Working Papers from Center for Research in Economics and Statistics

Abstract: We show that resale-below-cost laws enable producers to impose price-floors toretailers. This mechanism suppresses downstream competition but also and moresurprisingly dampens upstream competition, leading to higher prices and lower welfare.This article also shows that a price-floor implements corner equilibria that areworse for welfare than a resale price maintenance contract. Retailers’ buyer powerappears as a key element for a price-floor to work out.

Pages: 47
Date: 2007
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Related works:
Journal Article: Anti-competitive effects of resale-below-cost laws (2011) Downloads
Working Paper: Anti-Competitive Effects of resale-Below-Cost Laws (2011) Downloads
Working Paper: Anti-competitive effects of resale-below-cost laws (2010)
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