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The Political Economy of Resale Price Maintenance

Authors: Marvel, Howard P; McCafferty, Stephen;

The Political Economy of Resale Price Maintenance

Abstract

Although many economists argue that resale price maintenance (RPM) enhances the efficiency of distribution systems, RPM has proven politically unpalatable. Opposition to RPM arises primarily from concern that it raises prices, an empirical judgment based on comparisons of prices in RPM states with prices in "free-trade" (non-RPM) jurisdictions. We develop a model of RPM pricing that shows that prices chosen by manufacturers under universal RPM are close to those chosen without RPM. Manufacturers "pay" for dealer services through lowered wholesale prices. When jurisdictions are mixed, manufacturers select compromise wholesale prices, and retail prices in RPM jurisdictions exceed those in free-trade states. We use the theoretical results as a basis for the analysis of the evolution of political attitudes toward RPM.

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Powered by OpenAIRE graph
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selected citations
These citations are derived from selected sources.
This is an alternative to the "Influence" indicator, which also reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
BIP!Citations provided by BIP!
popularity
This indicator reflects the "current" impact/attention (the "hype") of an article in the research community at large, based on the underlying citation network.
BIP!Popularity provided by BIP!
influence
This indicator reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
BIP!Influence provided by BIP!
impulse
This indicator reflects the initial momentum of an article directly after its publication, based on the underlying citation network.
BIP!Impulse provided by BIP!
12
Average
Top 10%
Average
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