Anti-competitive effects of resale-below-cost laws

Marie-Laure Allain and Claire Chambolle ()
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Claire Chambolle: ALISS - Alimentation et sciences sociales - INRA - Institut National de la Recherche Agronomique

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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.

Date: 2010-08-01
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Published in International Journal of Industrial Organization, 2010, 29, pp.373 - 385. ⟨10.1016/j.ijindorg.2010.07.006⟩

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Related works:
Journal Article: Anti-competitive effects of resale-below-cost laws (2011)
Working Paper: Anti-Competitive Effects of resale-Below-Cost Laws (2011)
Working Paper: Anti-Competitive Effects of Resale-Below-Cost Laws (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-03283956

DOI: 10.1016/j.ijindorg.2010.07.006

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