Anti-competitive effects of resale-below-cost laws

Marie Laure Allain; Claire Chambolle

doi:10.1016/j.ijindorg.2010.07.006

Anti-competitive effects of resale-below-cost laws

Marie Laure Allain
, Claire Chambolle

ENSAE
UR1303 ALISS Alimentation et Sciences Sociales

Research output: Contribution to journal › Article › peer-review

Abstract

We show that resale-below-cost laws enable producers to impose industrywide price-floors to retailers. This mechanism suppresses downstream competition but also dampens upstream competition, leading to higher prices. Price-floor may be more profitable for producers than resale price maintenance contracts and, while resale price maintenance may have ambiguous effect on welfare, price-floors always harm welfare. Retailers' buyer power appears as a key element for a price-floor to work out.

Original language	English
Pages (from-to)	373-385
Number of pages	13
Journal	International Journal of Industrial Organization
Volume	29
Issue number	4
DOIs	https://doi.org/10.1016/j.ijindorg.2010.07.006
Publication status	Published - 1 Jul 2011

Keywords

Buyer power
Competition
Price-floor
Resale price maintenance

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10.1016/j.ijindorg.2010.07.006

Cite this

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abstract = "We show that resale-below-cost laws enable producers to impose industrywide price-floors to retailers. This mechanism suppresses downstream competition but also dampens upstream competition, leading to higher prices. Price-floor may be more profitable for producers than resale price maintenance contracts and, while resale price maintenance may have ambiguous effect on welfare, price-floors always harm welfare. Retailers' buyer power appears as a key element for a price-floor to work out.",

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Anti-competitive effects of resale-below-cost laws

Abstract

Keywords

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