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The Competitive Effects of Resale Price Maintenance

Gilligan, Thomas W. (1985) The Competitive Effects of Resale Price Maintenance. Social Science Working Paper, 562. California Institute of Technology , Pasadena, CA. (Unpublished)

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The competitive effects of resale price maintenance (RPM) are theoretically diverse. RPM can cause allocation distortions or promote productive efficiencies in the distribution process. Moreover, extant cross-sectional empirical evidence is incapable of distinguishing among the potentially disparate effects of RPM. This paper conducts hypothesis tests of the alternative theories of RPM. The empirical framework relates estimates of the effects of RPM for a cross-section of observations to necessary conditions of the alternative models. This analysis indicates that RPM is used both to foster cartels and promote efficiencies in the distribution process. This result is consistent with the growing body of case study analysis that suggests that RPM is used for a variety of reasons. This result also questions the current per se illegal status of RPM in the antitrust laws. Evidence is also provided concerning the strategic interaction between manufacturers and dealers in the distribution process and the use of financial data in analyzing propositions in industrial organization.

Item Type:Report or Paper (Working Paper)
Additional Information:The comments of John Binder, Andrew Chalk, Thomas Overstreet, Frederick Warren-Boulton, and seminar participants at the Economic Policy Office of the Justice Department, the Federal Trade Commission, University of Southern California, and Washington University are greatly appreciated. My dissertation committee, Barry Weingast, William Marshall, and Lee Benham, is largely responsible for any positive contributions contained in this paper. I bear sole responsibility for the rest. Published as Gilligan, Thomas W. "The competitive effects of resale price maintenance." The RAND Journal of Economics (1986): 544-556.
Group:Social Science Working Papers
Subject Keywords:Antitrust, Cartels, Manufacturing industries, Market prices, Price discrimination, Resale price maintenance, Transaction costs, Industrial products, Statistical estimation, Industrial market
Series Name:Social Science Working Paper
Issue or Number:562
Record Number:CaltechAUTHORS:20170915-165557217
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Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:81508
Deposited By: Jacquelyn Bussone
Deposited On:19 Sep 2017 17:41
Last Modified:03 Oct 2019 18:43

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