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Resale Price Maintenance and Restrictions on Dominant Firm and Industry-Wide Adoption

Author

Listed:
  • Oystein Foros

    (Norwegian School of Economics and Business Administration)

  • Hans Jarle Kind

    (Norwegian School of Economics and Business Administration and CESifo)

  • Greg Shaffer

    (University of Rochester and University of East Anglia)

Abstract

We consider a model in which firms use resale price maintenance (RPM) to dampen competition. We find that even though the motive for using RPM is thus anticompetitive, market forces may limit the overall adverse impact on consumers. Indeed, we find that when there are a large number of firms in the market, consumer welfare under a laissez-faire policy might be as high or almost as high as it would be under an alternative policy in which RPM is banned. Government interventions that put an upper limit on the extent of industry-wide adoption of RPM can have adverse welfare effects in the model. We further show that proposed guidelines in the United States and Europe may come close to minimizing welfare.

Suggested Citation

  • Oystein Foros & Hans Jarle Kind & Greg Shaffer, 2010. "Resale Price Maintenance and Restrictions on Dominant Firm and Industry-Wide Adoption," Working Paper series, University of East Anglia, Centre for Competition Policy (CCP) 2010-11, Centre for Competition Policy, University of East Anglia, Norwich, UK..
    • Handle: RePEc:uea:ueaccp:2010_11
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    References listed on IDEAS

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    Cited by:

    1. Pinar Akman & D. Daniel Sokol, 2017. "Online RPM and MFN Under Antitrust Law and Economics," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 50(2), pages 133-151, March.
    2. Matthias Hunold & Johannes Muthers, 2011. "Resale Price Maintenance: Hurting Competitors, Consumers and Yourself," Working Papers 100, Bavarian Graduate Program in Economics (BGPE).
    3. Foros, Øystein & Kind, Hans Jarle & Shaffer, Greg, 2015. "Apple's Agency Model and the Role of Resale Price Maintenance," Discussion Papers 2015/32, Norwegian School of Economics, Department of Business and Management Science.
    4. repec:dau:papers:123456789/6913 is not listed on IDEAS

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    More about this item

    Keywords

    Vertical restraints; safe harbors; antitrust policy;
    All these keywords.

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
    • L42 - Industrial Organization - - Antitrust Issues and Policies - - - Vertical Restraints; Resale Price Maintenance; Quantity Discounts

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