A note on collusion and resale price maintenance |
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| Authors: | Bastiaan M Overvest |
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| Institution: | 1. University of Groningen and The Netherlands Competition Autority, P.O Box 16326, The Hague, The Netherlands
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| Abstract: | This paper advances a new, anti-collusive, explanation of resale price maintenance. By imposing a price floor, an upstream firm increases the non-cooperative profits of downstream firms and makes collusion relatively less profitable. As a result, collusion may be destabilized and the price floor enables a manufacturer to prevent collusive behavior among downstream firms. This finding contrasts with the popular view that resale price maintenance fosters collusion. |
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