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RESALE PRICE MAINTENANCE AND INTERLOCKING RELATIONSHIPS *
Author(s) -
REY PATRICK,
VERGÉ THIBAUD
Publication year - 2010
Publication title -
the journal of industrial economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.93
H-Index - 77
eISSN - 1467-6451
pISSN - 0022-1821
DOI - 10.1111/j.1467-6451.2010.00439.x
Subject(s) - monopoly , competition (biology) , argument (complex analysis) , context (archaeology) , resale price maintenance , industrial organization , business , microeconomics , empirical research , economics , mathematics , ecology , paleontology , biochemistry , chemistry , incentive , biology , statistics
Dampening of interbrand as well intrabrand competition is often advanced to justify per se illegality of RPM. We analyze this argument in a context where rival manufacturers distribute their products through the same competing retailers. We show that RPM indeed limits the exercise of competition at both levels and can generate industry‐wide monopoly pricing. The impact on prices depends on the extent of potential competition at either level as well as on the parties' influence in determining the terms of the contracts. Our analysis sheds a new light on ongoing legal developments and is supported by recent empirical studies.