Resale Price Maintenance and Restrictions on Dominant Firm and Industry-Wide Adoption

Øystein Foros, Hans Jarle Kind and Greg Shaffer
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Greg Shaffer: University of Rochester and University of East Anglia

No 2010-11, Working Paper series, University of East Anglia, Centre for Competition Policy (CCP) from Centre for Competition Policy, University of East Anglia, Norwich, UK.

Abstract: We consider a model in which firms use resale price maintenance (RPM) to dampen competition. We find that even though the motive for using RPM is thus anticompetitive, market forces may limit the overall adverse impact on consumers. Indeed, we find that when there are a large number of firms in the market, consumer welfare under a laissez-faire policy might be as high or almost as high as it would be under an alternative policy in which RPM is banned. Government interventions that put an upper limit on the extent of industry-wide adoption of RPM can have adverse welfare effects in the model. We further show that proposed guidelines in the United States and Europe may come close to minimizing welfare.

Keywords: Vertical restraints; safe harbors; antitrust policy (search for similar items in EconPapers)
JEL-codes: L13 L41 L42 (search for similar items in EconPapers)
Date: 2010-01-01
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Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Resale price maintenance and restrictions on dominant firm and industry-wide adoption (2011)
Working Paper: Resale Price Maintenance and Restrictions on Dominant Firm and Industry-Wide Adoption (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:uea:ueaccp:2010_11

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