Loss-Leaders Banning Laws as Vertical Restraints

Marie-Laure Allain; Claire Chambolle

doi:10.2202/1542-0485.1092

Article

Loss-Leaders Banning Laws as Vertical Restraints

Marie-Laure Allain and Claire Chambolle

Published/Copyright: February 24, 2005

Published by

Become an author with De Gruyter Brill

Submit Manuscript Author Information Explore this Subject

From the journal Journal of Agricultural & Food Industrial Organization Volume 3 Issue 1

This paper explores the indirect inflationary mechanism allowed by loss-leaders banning laws. In a model where a monopolist producer sells his product through vertically separated and differentiated retailers, we show that the ban of loss-leading can be used strategically by the producer to increase his wholesale price and pay the retailers through negotiated listing fees, thus raising his profit. The ban turns wholesale prices into floor prices, thus increasing resale price and lessening consumers’ welfare. These results are robust if the listing fees are two-part tariff.

Keywords: vertical restraints; loss-leaders; retailing sector; intrabrand competition

Published Online: 2005-2-24

You are currently not able to access this content.

Articles in the same Issue

https://doi.org/10.2202/1542-0485.1092

Keywords for this article

vertical restraints; loss-leaders; retailing sector; intrabrand competition