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Title:Resale price maintenance and manufacturer competition for retail services PDF Logo
Authors:Hunold, Matthias
Muthers, Johannes
Issue Date:2012
Series/Report no.:ZEW Discussion Papers 12-028
Abstract:We investigate the incentives of manufacturers to use resale price maintenance (RPM) when selling products through common retailers. In our model retailers provide product specific pre-sales services. If the competitive retail margins are low, each manufacturer fixes a minimum price to induce favorable retail services. With symmetric manufacturers, products are equally profitable in equilibrium and no product is favored as without RPM, but retail prices are higher. We show that minimum RPM can create a prisoner's dilemma for manufacturers without increasing, and possibly even decreasing the overall service quality. This challenges the service argument as an efficiency defense for RPM.
Subjects:biased sales advice
common agency
manufacturer dilemma
matching
retail service
RPM
vertical restraints
JEL:D83
L42
Persistent Identifier of the first edition:urn:nbn:de:bsz:180-madoc-322458
Document Type:Working Paper
Appears in Collections:Publikationen von Forscherinnen und Forschern des ZEW
ZEW Discussion Papers

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