Loss leaders banning laws as vertical restraints

Marie-Laure Allain and Claire Chambolle ()

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Abstract: This paper explores the indirect inflationary mechanism allowed by loss leaders banning laws. In a model where a monopolist producer sells his product through vertically separated and differentiated retailers, we show that the ban of resale at a loss can be used strategically by the producer to increase his wholesale price and pay the retailers through negotiated listing fees, thus raising his profit. The ban turns wholesale prices into floor prices, thus increasing resale price and lessening consumers' welfare.

Keywords: Vertical restraints; Loss leaders; Retail industry; Slotting allowances; Distribution; Relations verticales; Revente à perte; Marges arrière (search for similar items in EconPapers)
Date: 2007
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Published in Journal of Agricultural & Food Industrial Organization, 2007, 3 (1), pp.1092-1092

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Related works:
Journal Article: Loss-Leaders Banning Laws as Vertical Restraints (2005)
Working Paper: Loss-leaders Banning Laws as Vertical Restraints (2004)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-00242935

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