Abstract

http://ssrn.com/abstract=1656052
 
 

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Competitive Resale Price Maintenance in the Absence of Free-Riding


Benjamin Klein


University of California, Los Angeles (UCLA) - Department of Economics

2009

Antitrust Law Journal, Vol. 76, No. 2, 2009

Abstract:     
Resale price maintenance need not be economically justified by the prevention of free-riding. Consistent with business realities, point-of-sale retailer promotional efforts often have a significant effect on consumer demand for a manufacturer’s products; and manufacturers often use resale price maintenance as an efficient way to purchase these promotional services from retailers. Even when there is no retailer free-riding, a retailer that discounts may reduce the compensation received by other retailers for promoting the manufacturer’s products, leading other retailers to discontinue distribution or reduce the promotional efforts they devote to the sale of the manufacturer’s products. The resulting reduction in demand for the manufacturer’s products provides a procompetitive rationale for the prevention of retailer price discounting. This broadly applicable procompetitive motivation for resale price maintenance has important implications for antitrust analysis, whether the legal standard is rule of reason or per se liability.

Number of Pages in PDF File: 52

Keywords: resale price maintenance, free-riding

JEL Classification: L42, K21

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Date posted: July 9, 2011  

Suggested Citation

Klein, Benjamin, Competitive Resale Price Maintenance in the Absence of Free-Riding (2009). Antitrust Law Journal, Vol. 76, No. 2, 2009. Available at SSRN: http://ssrn.com/abstract=1656052

Contact Information

Benjamin Klein (Contact Author)
University of California, Los Angeles (UCLA) - Department of Economics ( email )
1999 Avenue of the Stars
Suite 2500
Los Angeles, CA 90067-6028
United States
310-728-2025 (Phone)
310-728-2070 (Fax)
HOME PAGE: http://www.econ.ucla.edu/people/Faculty/Klein.html
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