The Competitive Effects of Resale Price Maintenance
- Creators
- Gilligan, Thomas W.
Abstract
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.
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.Attached Files
Submitted - sswp562.pdf
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Additional details
- Eprint ID
- 81508
- Resolver ID
- CaltechAUTHORS:20170915-165557217
- Created
-
2017-09-19Created from EPrint's datestamp field
- Updated
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2019-10-03Created from EPrint's last_modified field
- Caltech groups
- Social Science Working Papers
- Series Name
- Social Science Working Paper
- Series Volume or Issue Number
- 562