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The Evolving Law and Economics of Resale Price Maintenance

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  • Benjamin Klein

Abstract

Economic developments since the publication of The Antitrust Paradox have reinforced Bork's view that resale price maintenance is part of the competitive market process by which firms create efficient distribution arrangements. Even when there is no retailer free riding, manufacturers cannot rely entirely on retailer competition to supply desired point-of-sale retailing services because retailer promotion has little or no inter-retailer demand effects. Consequently, manufacturers must compensate retailers for devoting their valuable retail assets to the sale of a manufacturer's products, and resale price maintenance often is an efficient way to accomplish this. Therefore, contrary to Bork, retailers may initiate demands for resale price maintenance to obtain a competitive market price for their promotional services.

Suggested Citation

  • Benjamin Klein, 2014. "The Evolving Law and Economics of Resale Price Maintenance," Journal of Law and Economics, University of Chicago Press, vol. 57(S3), pages 161-179.
    • Handle: RePEc:ucp:jlawec:doi:10.1086/675898
    DOI: 10.1086/675898
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    References listed on IDEAS

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    1. Gary S. Becker & Kevin M. Murphy, 1993. "A Simple Theory of Advertising as a Good or Bad," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 108(4), pages 941-964.
    2. 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.
    3. Ralph A. Winter, 1993. "Vertical Control and Price Versus Nonprice Competition," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 108(1), pages 61-76.
    4. Howard P. Marvel & Stephen McCafferty, 1984. "Resale Price Maintenance and Quality Certification," RAND Journal of Economics, The RAND Corporation, vol. 15(3), pages 346-359, Autumn.
    5. Klein, Benjamin & Murphy, Kevin M, 1988. "Vertical Restraints as Contract Enforcement Mechanisms," Journal of Law and Economics, University of Chicago Press, vol. 31(2), pages 265-297, October.
    6. Ornstein, Stanley I & Hanssens, Dominique M, 1987. "Resale Price Maintenance: Output Increasing or Restricting? The Case of Distilled Spirits in the United States," Journal of Industrial Economics, Wiley Blackwell, vol. 36(1), pages 1-18, September.
    7. Benjamin Klein & Joshua D. Wright, 2007. "The Economics of Slotting Contracts," Journal of Law and Economics, University of Chicago Press, vol. 50(3), pages 421-454.
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    Cited by:

    1. Roger D. Blair & Wenche Wang, 2017. "Resale Price Maintenance: An Economic Analysis of its Anticompetitive Potential," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 50(2), pages 153-168, March.

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