Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/246296 
Year of Publication: 
2021
Series/Report no.: 
Working Paper No. 2006
Publisher: 
Johannes Kepler University of Linz, Department of Economics, Linz
Abstract: 
In a model with manufacturer and retailer competition, we show that RPM facilitates manufacturer cartels when retailers have an outside option to selling the manufacturer's product. Because retailers have an effective outside option, the manufacturer can only ensure contract acceptance by leaving a sufficient margin to the retailers. This restricts the wholesale price level even when manufacturers collude. In this context, collusion can only become profitable for manufacturers if they use resale price maintenance. We thus provide a novel theory of harm for resale price maintenance when manufacturers collude and illustrate the fit of this theory in competition policy cases.
Subjects: 
resale price maintenance
collusion
retailing
JEL: 
D43
K21
K42
L41
L42
L81
Document Type: 
Working Paper

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