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Accounting For Social Costs Associated With Resale Price Maintenance

Author

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  • CINDI FLESHMAN
  • JONATHAN WILLNER

Abstract

Resale price maintenance (RPM) can provide a positive or negative effect on social welfare. The evaluation depends on many factors, such as whether a high‐demand or low‐demand state exists, storage/holding costs, and disposal costs. A number of articles addressing the welfare effects of RPM conclude they enhance social welfare. Disposal costs for manufactured products are real and increasingly accounted for in firm costs, and are an essential issue in environmental economics. This article examines the case for RPM with disposal costs. When not incorporated into firm profits, RPM may be welfare reducing. (JEL D42, D62, D81)

Suggested Citation

  • Cindi Fleshman & Jonathan Willner, 2005. "Accounting For Social Costs Associated With Resale Price Maintenance," Contemporary Economic Policy, Western Economic Association International, vol. 23(3), pages 429-435, July.
    • Handle: RePEc:bla:coecpo:v:23:y:2005:i:3:p:429-435
    DOI: 10.1093/cep/byi032
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    References listed on IDEAS

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    1. Deneckere, Raymond & Marvel, Howard P & Peck, James, 1997. "Demand Uncertainty and Price Maintenance: Markdowns as Destructive Competition," American Economic Review, American Economic Association, vol. 87(4), pages 619-641, September.
    2. D Flath & T Nariu*, 2000. "Demand Uncertainty And Resale Price Maintenance," Contemporary Economic Policy, Western Economic Association International, vol. 18(4), pages 397-403, October.
    3. Raymond Deneckere & Howard P. Marvel & James Peck, 1996. "Demand Uncertainty, Inventories, and Resale Price Maintenance," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 111(3), pages 885-913.
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    Cited by:

    1. Matsui, Kenji, 2010. "Returns policy, new model introduction, and consumer welfare," International Journal of Production Economics, Elsevier, vol. 124(2), pages 299-309, April.

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    More about this item

    JEL classification:

    • D42 - Microeconomics - - Market Structure, Pricing, and Design - - - Monopoly
    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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