Two tales on resale

Felix Höffler and Klaus Schmidt ()

Munich Reprints in Economics from University of Munich, Department of Economics

Abstract: In some markets vertically integrated firms sell directly to final customers but also to independent downstream firms with whom they then compete on the downstream market. It is often argued that resellers intensify competition and benefit consumers, in particular when wholesale prices are regulated. However, we show that (i) resale may increase prices and make consumers worse off and that (ii) standard \"retail minus X regulation\" may increase prices and harm consumers. Our analysis suggests that this is more likely if the number of integrated firms is small, the degree of product differentiation is low, and/or if competition is spatial.

Date: 2008
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Citations: View citations in EconPapers (19)

Published in International Journal of Industrial Organization 6 26(2008): pp. 1448-1460

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Persistent link: https://EconPapers.repec.org/RePEc:lmu:muenar:19443

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