This paper examines the competitive effects of resale price maintenance (RPM) through inventory decisions under demand uncertainty. We focus on the Japanese publishing industry where RPM is allowed. We develop and estimate a model of RPM in which price and inventory are determined before demand...

In many settings, behavioral economists have documented a price reference effect: the fact that a consumer's willingness to pay for a good is affected by difference between the observed price and the reference price they rationally expect. In this paper, we show that such preferences interact...

This paper analyzes the determinants of pass-through that are specific to vertical relationships between wholesalers and retailers. Fluctuations in input costs (due to, e.g., exchange rate shocks) are transmitted first to the wholesale price, and then to the retail price. The type of vertical...

We examine the implications of different contractual forms for welfare as well as for firms’ profits in a framework in which a vertically integrated firm sells its good to an independent downstream firm. Under downstream Bertrand competition, the standard result of the desirability of two-part...

We provide a theory of how RPM facilitate upstream cartels absent any information asymmetries using a model with manufacturer and retailer competition. Because retailers have an effective outside option to each manufacturer’s contract, the manufacturers can only ensure contract acceptance by...

We provide a novel theory of harm for resale price maintenance (RPM). In a model with two manufacturers and two retailers, we show that RPM facilitates manufacturer collusion when retailers have alternatives to selling a manufacturer's product. Because of the alternatives, manufacturers can only...

The introduction of retail competition in various states in United States was expected to lower electricity bills, expand the choice set of consumers, and encourage horizontal differentiation by providing value-added services. However, to date, most regulators in states with retail choice often...

Price comparison websites, where consumers can compare prices at a search cost that is close to zero, have become increasingly common around the world. Using daily information on prices, click-throughs, and the number of retailers for a sample of consumer electronics and durable goods over a...

We study how the introduction of private-label brands (PLs) affects retailers' prices, demand, and profits, explicitly accounting for assortment adjustments of national brands (NBs) in retail stores. Using a detailed dataset on the U.S. beef market, we find that, when PLs are added to the...

Most of the literature on retail fuel markets find high-frequency and asymmetric price cycles. This is typically explained by the model of Edgeworth price cycles. A key element of this model is that prices fall to marginal costs during a cycle. It seems challenging to address this assumption...