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Salience in Retailing: Vertical Restraints on Internet Sales

Magdalena Helfrich and Fabian Herweg ()

Annual Conference 2017 (Vienna): Alternative Structures for Money and Banking from Verein für Socialpolitik / German Economic Association

Abstract: We provide an explanation for a brand manufacturer's rationale to prohibit retailers to distribute its products over the internet, based on the assumption that a consumer's purchasing decision is distorted by salient thinking. We find that banning online distribution of the branded good aligns retailers’ incentives with the manufacturer's interest to make quality the salient product attribute and allows it to charge a higher wholesale price than under free distribution.

JEL-codes: D43 K21 L42 (search for similar items in EconPapers)
Date: 2017
New Economics Papers: this item is included in nep-cta, nep-mic and nep-pay
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