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Delegated Sales, Agency Costs and the Competitive Effects of List Price

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Abstract

We propose a simple agency framework in which although competing producers always find it optimal to share information about their list (undiscounted) prices, consumers are not necessarily harmed by these agreements. In particular, when sales are delegated to self-interested parties (such as salesmen or retailers), we find that expected discounts are higher with than without information sharing if and only if agency costs are sufficiently low. This shows that agreements according to which firms disclose list prices to their competitors should be presumed neither as anti-competitive nor as pro-competitive.

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  • Enrique Andreu & Damien Neven & Salvatore Piccolo, 2020. "Delegated Sales, Agency Costs and the Competitive Effects of List Price," CSEF Working Papers 573, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
    • Handle: RePEc:sef:csefwp:573
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    1. Dmitry Lubensky, 2017. "A model of recommended retail prices," RAND Journal of Economics, RAND Corporation, vol. 48(2), pages 358-386, May.
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    Cited by:

    1. Haan, Marco A. & Heijnen, Pim & Obradovits, Martin, 2023. "Competition with list prices," Games and Economic Behavior, Elsevier, vol. 140(C), pages 502-528.
    2. Harrington, Joseph E., 2022. "The Anticompetitiveness of a Private Information Exchange of Prices," International Journal of Industrial Organization, Elsevier, vol. 85(C).

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    More about this item

    Keywords

    Agency Costs; Consumer Welfare; Information Sharing; List Prices;
    All these keywords.

    JEL classification:

    • L42 - Industrial Organization - - Antitrust Issues and Policies - - - Vertical Restraints; Resale Price Maintenance; Quantity Discounts
    • L50 - Industrial Organization - - Regulation and Industrial Policy - - - General
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce

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