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Anti-competitive effects of resale-below-cost laws

Abstract : We show that resale-below-cost laws enable producers to impose industrywide price-floors to retailers. This mechanism suppresses downstream competition but also dampens upstream competition, leading to higher prices. Price-floor may be more profitable for producers than resale price maintenance contracts and, while resale price maintenance may have ambiguous effect on welfare, price-floors always harm welfare. Retailers' buyer power appears as a key element for a price-floor to work out.
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Contributor : Claire Chambolle <>
Submitted on : Monday, July 12, 2021 - 11:55:28 AM
Last modification on : Wednesday, August 4, 2021 - 3:13:24 AM

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Marie-Laure Allain, Claire Chambolle. Anti-competitive effects of resale-below-cost laws. International Journal of Industrial Organization, Elsevier, 2010, 29, pp.373 - 385. ⟨10.1016/j.ijindorg.2010.07.006⟩. ⟨hal-03283956⟩



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