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Returns Policies and Retail Price Competition

Paddy Padmanabhan


Ivan P. L. Png

National University of Singapore

January 2004

We show that returns policies increase manufacturer profitability by attenuating price competition between retailers. This effect holds only in the presence of end-user demand uncertainty. The conditions under which a returns policy raises the manufacturer's profit are weaker when retailing is a duopoly than when retailing is a monopoly. This suggests that returns policies serve both to dampen competition and resolve demand uncertainty.

Number of Pages in PDF File: 12

Keywords: Channels, returns, competition, pricing

JEL Classification: D43, D83, L13, M30

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Date posted: February 3, 2004  

Suggested Citation

Padmanabhan, Paddy and Png, Ivan P. L., Returns Policies and Retail Price Competition (January 2004). Available at SSRN: http://ssrn.com/abstract=493162 or http://dx.doi.org/10.2139/ssrn.493162

Contact Information

Paddy V. Padmanabhan
INSEAD ( email )
Boulevard de Constance
Fontainebleau, 77305
Ivan P. L. Png (Contact Author)
National University of Singapore ( email )
Singapore, 117543
+65 6516-6807 (Phone)
HOME PAGE: http://sites.google.com/site/iplpng/
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