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Erscheinungsjahr: 
2008
Schriftenreihe/Nr.: 
DIW Discussion Papers No. 788
Verlag: 
Deutsches Institut für Wirtschaftsforschung (DIW), Berlin
Zusammenfassung: 
We analyze below-cost pricing in retail markets and examine its impact on social welfare as well as on suppliers' incentives to invest in quality. Considering negotiations about a linear wholesale price between the retailer and her suppliers, we find that below-cost pricing aggravates the double marginalization problem and causes welfare losses compared to a regime where below-cost pricing is banned. Furthermore, suppliers have stronger incentives to invest in high quality products if a ban of below-cost pricing is enforced.
Schlagwörter: 
Complementarities
Retailing
Below-Cost Pricing
JEL: 
L22
L42
Dokumentart: 
Working Paper

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