Die Dis cus si on Pape rs die nen einer mög lichst schnel len Ver brei tung von neue ren For schungs arbei ten des ZEW. Die Bei trä ge lie gen in allei ni ger Ver ant wor tung der Auto ren und stel len nicht not wen di ger wei se die Mei nung des ZEW dar.Dis cus si on Papers are inten ded to make results of ZEW research prompt ly avai la ble to other eco no mists in order to encou ra ge dis cus si on and sug gesti ons for revi si ons. The aut hors are sole ly respon si ble for the con tents which do not neces sa ri ly repre sent the opi ni on of the ZEW. Non-technical summaryResale price maintenance (RPM) arises when a manufacturer fixes the price at which retailers resell the manufacturer's products. There is wide consensus among policymakers and economists that RPM can facilitate collusion among manufacturers and among retailers. RPM can also be used by a manufacturer to exclude more efficient rivals. Yet the US Supreme Court overturned the long standing per-se illegality of minimum RPM with the Leegin decision of 2007. Courts now have to judge minimum RPM under the rule of reason. On the other side of the Atlantic, the European Commission decided to keep minimum and fixed RPM as core restrictions of competition in the renewed vertical block exemption of 2010, but the guidelines now specify when minimum RPM may be legal.The dominant efficiency defense both in Leegin and the European guidelines are service incentives: A manufacturer uses minimum RPM to provide retailers with the appropriate incentives for socially desirable services that would be under-provided with price competition. The economic foundation of this argument rests on models with a single manufacturer. Yet in many RPM cases, including Leegin, competing manufacturers sell through common retailers.With this paper, we shed light on the effects of RPM when competing manufacturers sell their products through common retailers who provide sales services. We set up a model which shows that if the competitive retail margins are low, each manufacturer fixes a minimum price to induce favorable retail services. With symmetric manufacturers, products are equally profitable in equilibrium and no product is favored, as without RPM, but retail prices are higher. We show that minimum RPM can create a prisoner's dilemma for manufacturers without increasing and possibly even decreasing the overall service quality.Competition policy has to distinguish between cases in which externalities yield an insufficient level of retail services and cases in which the service level is sufficient or even better without RPM. The danger is that competition policy relies too much on the established service arguments with a single manufacturer, which suggest that minimum RPM increases efficiency. Within our model, raising retail margins of only one product through minimum RPM indeed induces retailers to allocate more services to that product.Hence a manufacturer can demonstrate that minimum RPM is effective in increasing services for its product. However, if our model applies, mini...

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may AbstractIf an intermediary offers sellers a platform to reach consumers, he may face the following hold-up problem: sellers suspect the intermediary will enter their respective product market as a merchant after they have sunk fixed costs of entry. Therefore, fearing that their investments cannot be recouped, less sellers join the platform.Hence, committing to not becoming active in sellers' markets can be profitable for the intermediary.We discuss different platform tariff systems to analyze this hold-up problem.We find that proportional fees (which are observed in many relevant real-world examples) mitigate the problem, unlike classical two-part tariffs (which most of the literature on two-sided markets examines). Thus, we offer a novel explanation for the use of proportional platform fees.

We characterize mixed-strategy equilibria when capacity constrained suppliers can charge location-based prices to different customers. We establish an equilibrium with prices that weakly increase in the costs of supplying a customer. Despite prices above costs and excess capacities, each supplier exclusively serves its home market in equilibrium. Competition yields volatile market shares and an inefficient allocation of customers to firms. Even ex-post cross-supplies may restore efficiency only partly. We show that consumers may benefit from price discrimination whereas the the firms make the same profits as with uniform pricing. We use our findings to discuss recent competition policy cases and provide hints for a more refined coordinated-effects analysis.

We investigate the incentives of two manufacturers with common retailers to use resale price maintenance (RPM). Retailers provide product‐specific services that increase demand and manufacturers use minimum RPM to compete for favorable retail services for their products. Minimum RPM increases consumer prices and can create a prisoner's dilemma for manufacturers without increasing, and possibly even reducing, the overall level of retail services. If manufacturer market power is asymmetric, minimum RPM may distort the allocation of services toward the high‐priced products of the manufacturer with more market power. These results challenge the service argument as an efficiency defense for minimum RPM.

This article studies competition in markets with transport costs and capacity constraints. We compare the outcomes of price competition and coordination in a theoretical model and find that when firms compete, they more often serve more distant customers who are closer to the competitor's plant. If firms compete, the transport distance also varies in the degree of overcapacity, but not if they coordinate their sales. Using a rich micro-level data set of the cement industry in Germany, we study a cartel breakdown to identify the effect of competition on transport distances. Our econometric analyses support the theoretical predictions.