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Attention to online sales: The role of brand image concerns

Markus Dertwinkel-Kalt and Mats Köster

No 335, DICE Discussion Papers from University of Düsseldorf, Düsseldorf Institute for Competition Economics (DICE)

Abstract: We provide a novel intuition for why manufacturers restrict their retailers' ability to resell brandproducts online. Our approach builds on models of limited attention according to which pricedisparities across distribution channels guide a consumer's attention toward prices and lower herappreciation for quality. Thus, absent vertical restraints, one out of two distortions - a quality ora participation distortion - can arise in equilibrium. We show that, by ruling out both distortions,vertical restraints can be socially desirable, but can also hurt consumers through higher retail prices.Thereby, we identify a novel trade-off between efficiency and consumer surplus.

Keywords: Limited Attention; Online Sales; Antitrust; Vertical Restraints (search for similar items in EconPapers)
JEL-codes: D21 K21 L42 (search for similar items in EconPapers)
Date: 2020
New Economics Papers: this item is included in nep-com, nep-law, nep-mic and nep-mkt
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:dicedp:335

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