Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/215911
Authors: 
Dertwinkel-Kalt, Markus
Köster, Mats
Year of Publication: 
2020
Series/Report no.: 
DICE Discussion Paper 335
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.
Subjects: 
Limited Attention
Online Sales
Antitrust
Vertical Restraints
JEL: 
D21
K21
L42
ISBN: 
978-3-86304-334-6
Document Type: 
Working Paper

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