We develop a model of vertical pricing in which an original manufacturer sets wholesale prices in two markets integrated at the distributor level by parallel imports (PI). In this context we show that if competition policy requires uniform wholesale prices across locations it would push retail prices toward convergence as transportation costs fall. However, these retail prices could be higher t...

This paper offers a new theory of destructive competition. We compare minimum resale price maintenance (RPM) to retail market clearing in a model with a monopolistic manufacturer selling to competitive retailers. In both the RPM and Flexible-Pricing Games, retailers must order inventories before the realization of demand uncertainty. We find that manufacturer profits and equilibrium inventories...

The phenomenal growth of the fairtrade industry has attracted increased research interest but little is known as to what marketing factors drive fairtrade retail sales. This gap has profound implications for fairtrade marketing research and the future of the fairtrade industry. To provide a more robust and objective insight this paper draws on the analysis of supermarket loyalty card dataset of...

Geographic price discrimination is generally considered beneficial to firm profitability. However, theoretical results point to conditions under which firms might prefer to price uniformly across markets in oligopolistic settings. This paper provides an empirical analysis of competitive price discrimination and quantitatively assesses the profitability of national pricing relative to store-leve...

over the past three decades vertical price transmission analysis has been the subject of considerable attention in applied agricultural conomics. it has been argued that the existence of asymmetric price transmission generates rents for marketing and processing agents. retail prices allegedly move faster upwards than downwards in response to farm level pricemovements. this is an important issue...

Empirical studies to date have delivered mixed conclusions on the question of whether the widely acclaimed assertions of lower electronic retail (e-tail) prices are indeed true, and to what extent these benefits are able to transcend the virtual world by impacting retail prices. One explanation for the mixed conclusions is that they provide only a discrete snapshot of a limited segment of the m...

Studies of gasoline prices in multiple countries have found a repeated sequence of asymmetric cycles where a sharp price increase is followed by gradual decreases. This price pattern is linked to Maskin & Tirole’s (1988) theoretical duopoly pricing game that produces a similar pattern, Edgeworth price cycles. We examine data on average daily city-level retail gasoline and diesel prices for 355 ...

Abstract   Vertical cooperative (co-op) advertising is typically a cost sharing mechanism and coordinated effort by the channel’s members in order to increase demand and overall profits. In this marketing strategy, the manufacturer shares a fraction of the retailer’s advertising investment. This paper studies the advertising and pricing decisions in a retailer-manufacturer supply chain in which...

Like any new product, private label entry increases competition within a category leading to downward pressure on both wholesale and retail prices. But, given the higher margins for private labels and potential bargaining benefits for retailers, they have incentives to help private labels gain market share. The paper addresses two questions: First, do private labels enhance a retailer's bargain...