Premium
Attention to online sales: The role of brand image concerns
Author(s) -
DertwinkelKalt Markus,
Köster Mats
Publication year - 2021
Publication title -
journal of economics and management strategy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.672
H-Index - 68
eISSN - 1530-9134
pISSN - 1058-6407
DOI - 10.1111/jems.12449
Subject(s) - salience (neuroscience) , intuition , vertical restraints , distortion (music) , business , advertising , marketing , economic surplus , economics , microeconomics , psychology , computer science , welfare , market economy , amplifier , computer network , bandwidth (computing) , incentive , cognitive psychology , cognitive science
We provide a novel intuition for why manufacturers restrict their retailers' ability to resell brand products online. Our approach builds on models of salience‐driven attention according to which price disparities across distribution channels guide a consumer's attention toward prices and lower her appreciation for quality. Absent vertical restraints, therefore, one of two salience distortions—a quality or a participation distortion—can arise in equilibrium. We show that, by ruling out both distortions, vertical restraints on online sales can be socially desirable but can also hurt consumers through higher retail prices. We thereby identify a novel trade‐off between efficiency and consumer surplus.