A Consumer Behavioral Approach to Resale Price Maintenance

93 Pages Posted: 1 Feb 2018 Last revised: 6 Mar 2018

Thomas K. Cheng

The University of Hong Kong - Faculty of Law

Date Written: September 1, 2017

Abstract

This Article re-examines the various pro-competitive justifications and theories of harm for resale price maintenance (“RPM”), one of the most controversial practices in antitrust law. It argues that the existing literature overlooks three important issues regarding RPM, namely, the kind of retail service invoked in a justification, the kind of retailer at issue, and the prevailing model of consumer behavior. All three issues have important implications for the plausibility and validity of the various justifications and theories of harm for RPM. It argues that most of the existing literature presumes the inter-brand primacy model of consumer behavior. Once this model is not applicable, much of the prevailing analysis breaks down and the legality of RPM needs to be reconsidered. In particular, this Article demonstrates that many of the accepted justifications for RPM are of doubtful validity or are only valid under limited circumstances. This lends support to a more hostile view of RPM.

Keywords: Resale Price Maintenance, Consumer Behavior, Free Riding Defense, Externalities, Retail Services

JEL Classification: K21, M31

Suggested Citation

Cheng, Thomas K., A Consumer Behavioral Approach to Resale Price Maintenance (September 1, 2017). 10 Virginia Law & Business Review 1-92 (2017); University of Hong Kong Faculty of Law Research Paper No. 2018/012. Available at SSRN: https://ssrn.com/abstract=3099292

Thomas K. Cheng (Contact Author)

The University of Hong Kong - Faculty of Law ( email )

Pokfulam Road
Hong Kong, Hong Kong
China

HOME PAGE: http://hub.hku.hk/rp/rp01242

Register to save articles to
your library

Register

Paper statistics

Downloads
115
rank
220,358
Abstract Views
225
PlumX