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The Effects of Resale Price Maintenance on Shareholder Wealth: The Consequences of Schwegmann

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  • Hersch, Philip L

Abstract

Event study methodology is used to assess the effects of the 1951 U.S. Supreme Court Schwegmann decision, which severely weakened the enforcement of resale price maintenance contracts in the United States. Overall, upstream industries with heavy resale price maintenance usage apparently were not adversely affected by the decision. Among large retailing groups, a positive effect of the decision was found for department stores. Cross-section tests of the motives for the adoption of resale price maintenance provide support for hypotheses based on free-ridership, dealer cartels, and, to a lesser extent, protection of product reputation. Copyright 1994 by Blackwell Publishing Ltd.

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  • Hersch, Philip L, 1994. "The Effects of Resale Price Maintenance on Shareholder Wealth: The Consequences of Schwegmann," Journal of Industrial Economics, Wiley Blackwell, vol. 42(2), pages 205-216, June.
    • Handle: RePEc:bla:jindec:v:42:y:1994:i:2:p:205-16
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    Cited by:

    1. Kimmel, Randall K. & Antenucci, Robert & Hasan, Shahriar, 2017. "Investor perception and business method patents: A natural experiment," Economic Analysis and Policy, Elsevier, vol. 54(C), pages 26-48.
    2. Bakó, Barna & Kálecz-Simon, András, 2012. "Vertikális korlátozások - növelik vagy csökkentik a jólétet?. Érvek az irodalomból [Vertical constraints - do they increase or reduce welfare?. Arguments in the literature]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(10), pages 1138-1159.
    3. Mueller, Dennis C., 1996. "Lessons from the United States's antitrust history," International Journal of Industrial Organization, Elsevier, vol. 14(4), pages 415-445, June.
    4. Simshauser, Paul & Tian, Yuan & Whish-Wilson, Patrick, 2015. "Vertical integration in energy-only electricity markets," Economic Analysis and Policy, Elsevier, vol. 48(C), pages 35-56.
    5. Doran, Colin & Stratmann, Thomas, 2021. "How does liability affect prices? Railroad sparks and timber," International Review of Law and Economics, Elsevier, vol. 66(C).
    6. Davis, Yehuda & Govindaraj, Suresh & Suslava, Kate, 2024. "Does the stock market anticipate events and supreme court decisions in corporate cases?," Global Finance Journal, Elsevier, vol. 60(C).
    7. John Asker & Heski Bar-Isaac, 2010. "Exclusionary Minimum Resale Price Maintenance," NBER Working Papers 16564, National Bureau of Economic Research, Inc.
    8. Michael Cichello & Douglas Lamdin, 2006. "Event Studies and the Analysis of Antitrust," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 13(2), pages 229-245.
    9. Jürgen-Peter Kretschmer, 2014. "How to deal with resale price maintenance: What can we learn from empirical results?," European Journal of Law and Economics, Springer, vol. 38(2), pages 343-368, October.
    10. Cooper, James C. & Froeb, Luke M. & O'Brien, Dan & Vita, Michael G., 2005. "Vertical antitrust policy as a problem of inference," International Journal of Industrial Organization, Elsevier, vol. 23(7-8), pages 639-664, September.

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