Vertical Information Restraints: Pro- and Anti-Competitive Impacts of Minimum Advertised Price Restrictions
John Asker and
Heski Bar-Isaac ()
No 22771, NBER Working Papers from National Bureau of Economic Research, Inc
We consider vertical contracts where the retail market may involve search frictions. Minimum advertised price restrictions (MAP) act as a restraint on customers’ information and so can increase search frictions in the retail sector. Such restraints, thereby, soften retail competition—an impact also generated by resale price maintenance (RPM). However, by accommodating (consumer or retailer) heterogeneity, MAP can allow for higher manufacturer profits than RPM. We show that they can do so through facilitating price discrimination among consumers; encouraging service provision; and facilitating manufacturer collusion. Thus, welfare effects may be positive or negative compared to RPM or to the absence of such restrictions.
JEL-codes: K21 L13 L15 L22 L42 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com, nep-ind, nep-law, nep-mic and nep-mkt
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Published as John Asker & Heski Bar-Isaac, 2020. "Vertical Information Restraints: Pro- and Anticompetitive Impacts of Minimum-Advertised-Price Restrictions," The Journal of Law and Economics, vol 63(1), pages 111-148.
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Journal Article: Vertical Information Restraints: Pro- and Anticompetitive Impacts of Minimum-Advertised-Price Restrictions (2020)
Working Paper: Vertical Information Restraints: Pro- and Anti-Competitive Impacts of Minimum Advertised Price Restrictions (2016)
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