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Manufacturer Cartels and Resale Price Maintenance

Matthias Hunold and Johannes Muthers ()

No 2020-06, Economics working papers from Department of Economics, Johannes Kepler University Linz, Austria

Abstract: We provide a theory of how RPM facilitate upstream cartels absent any information asymmetries using a model with manufacturer and retailer competition. Because retailers have an effective outside option to each manufacturer’s contract, the manufacturers can only ensure contract acceptance by leaving a sufficient margin to the retailers. This restricts the wholesale price level even when manufacturers collude. In this context, resale price maintenance may only be profitable for the manufacturers if they collude. We thus provide a novel theory of harm for resale price maintenance when manufacturers collude and illustrate the fit of this theory in various competition policy cases.

Keywords: resale price maintenance; collusion; retailing. (search for similar items in EconPapers)
JEL-codes: L41 L42 L81 (search for similar items in EconPapers)
Date: 2020-03
New Economics Papers: this item is included in nep-com, nep-cta, nep-ind and nep-mic
Note: English
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Persistent link: https://EconPapers.repec.org/RePEc:jku:econwp:2020-06

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