ON THE PROFITABILITY OF RESALE PRICE MAINTENANCE WHEN DEMAND IS UNCERTAIN

A previous study finds that in a market where a manufacturer faces uncertain demand and sells to consumers through competitive retailers, the manufacture wishes to support adequate retail inventories by imposing resale price maintenance (RPM). I show that if retail inventories are allocated to consumers through first‐come‐first‐served rule rather than efficient rationing rule in the game with unconstrained retail competition, imposing RPM may not be profitable. It may not encourage more retail inventories either. RPM may also lower consumer surpluses and social welfare. This study casts some doubt on the demand uncertainty theory that supports RPM.     

Demand disruption and coordination of supply chain via effort and revenue sharing

This article explores the equilibrium behaviour of a basic supplier–retailer distribution channel under demand disruption via effort and revenue sharing contract. This differs from the traditional supply chain coordination model. Firstly, demand is simultaneously affected by retail price and nonprice marketing effort from manufacturers and retailers. Secondly, when the demand is disrupted, this article considers disruptions in the market scale and price sensitivity coefficient. Thirdly, the supply chain coordination model is proposed via effort and revenue sharing contract. In this way, the manufacturer reduces the wholesale price as an incentive for the retailer to share revenue. Finally, the total supply chain profit is greater with contract than no contract. This also constitutes another incentive for the players to follow the effort and revenue sharing contract.     

需求扰动下供应链契约协调机制研究

本文根据需求扰动的影响力大小,将其分为日常需求扰动和突发需求扰动,并对比了两种不同需求扰动的产生原因和特征;具体阐述了需求扰动是如何对供应链上各企业造成影响的,并给出了两种不同的传导模式;通过剖析需求扰动风险传导机制,从3个角度提出了针对需求扰动的控制策略;最后,通过建模探讨了在需求扰动后价格敏感系数改变的情况下零售商对产品价格的调整。同时,为了保证零售商按发生需求扰动后的最优订购量订购产品和按最优产品零售价给产品定价,根据需求扰动不同的影响程度,分类讨论了与供应链相协调的适用契约。     

MANUFACTURER ACCEPTANCE OF RETURNS*

Modelling the retailers' behaviour explicitly, I extend the model of manufacturer returns policy of Flath and Nariu (1989) by introducing general demand conditions under uncertainty. I derive an equivalence theorem between manufacturer acceptance of returns and resale price maintenance (RPM) under conditions of zero marginal cost, risk neutrality and symmetric information. This was first shown by Marvel and Reagan (1986) in a somewhat different context. I also discuss some differences between RPM and return policy under asymmetric information and risk attitudes.     

Manufacturer's pricing strategy in a two-level supply chain with competing retailers and advertising cost dependent demand

The paper studies a two-echelon supply chain comprising one manufacturer and two competing retailers with advertising cost dependent demand. The manufacturer acts as the Stackelberg leader who specifies wholesale price for each retailer. The two retailers compete with each other in advertising and they have different sales costs. The manufacturer uses one of the following two pricing strategies: (i) setting the same wholesale price for both the retailers irrespective of the difference in their sales costs; (ii) setting different wholesale prices for the retailers depending on their sales costs. Two models are developed. In the first model, the manufacturer shares a fraction of each retailer's advertising cost while in the second model, the manufacturer does not share any retailer's advertising expenses. In both the models, we derive the retailers' and manufacturer's optimal strategies. A numerical example is given to illustrate the theoretical results developed in each model. Computational results show that it is always beneficial for the manufacturer to adopt different wholesale pricing strategy for the retailers.     

RESALE PRICE MAINTENANCE AND ANTITRUST POLICY

Some scholars would legalize all purely vertical resale price maintenance (RPM). They acknowledge that RPM can harm consumers when it facilitates horizontal collusion among manufacturers or dealers. But when RPM is purely vertical (i.e., when it is imposed by a manufacturer acting independently), they argue that it must be procompetitive. Recent theoretical research has shown, however, that purely vertical RPM can reduce economic efficiency. This result occurs when the higher prices and dealer services induced by RPM benefit marginal consumers but substantially reduce the welfare of intramarginal consumers, who would have preferred the product without the services at a lower price. Since these circumstances are empirically plausible, a rule of per se legality may not be appropriate. At the same time, evaluating RPM under the rule of reason might not be workable. Anticompetitive instances of the type described could be difficult to prove. These research findings, therefore, are most consistent with a rule of per se illegality for RPM, with exceptions for situations in which RPM is most likely to be pro-competitive (e.g., new entry).     

碳交易及补贴机制下供应链差别定价研究

研究了碳交易机制、补贴机制以及碳交易及补贴机制下，一个二级供应链中普通产品和低碳产品竞争的差别定价策略，通过求解Stackelberg博弈模型得出单一的补贴政策并不能激励制造商进行节能减排，应与碳交易机制结合使用，其节能减排效果优于单一的碳交易机制。最后通过一个算例分析验证了碳交易及补贴机制的有效性。研究表明：碳交易价格升高到一定程度时，普通产品的零售价批发价均升高，低碳产品的价格均下降，普通产品的销量下降，低碳产品销量上升，碳排放总量下降；随着低碳补贴的增加，普通产品的零售价，低碳产品的批发价、零售价均降低，普通产品的销量下降，低碳产品的销量上升，其中低碳产品的价格和需求量对低碳补贴的反应更加敏感，使碳排放量降低的同时还提高了制造商和零售商的利润。     

COMMENTS ON MARVEL: HOW FAIR IS FAIR TRADE?

Each of the papers in this symposium concludes with policy recommendations regarding the legality of resale price maintenance (RPM). The legal standard used to judge RPM affects the entire universe of manufacturer control over resale prices. Therefore, policy recommendations are valid only to the extent that the proffered economic theory applies to a substantial portion of that universe. My comments focus primarily on how much of the RPM universe is addressed by Marvel's (1985) explanations in “How Fair is Fair Trade?” If an economic theory, no matter how interesting academically, describes only a small minority of RPM instances, it should not form the basis for public policy.     

RETURNS SYSTEM WITH REBATES*

We consider a variant of the newsvendor problem. Atomistic retailers each buy merchandise from a monopoly supplier for resale at a market‐determined common retail price that depends upon the total industry order quantity and upon a stochastic demand. After the orders are filled, the supplier learns the realization of demand but the retailers do not. We show that, in this setting, a returns system with rebates (with previously set buy‐back price for returns and ex post payments from the supplier to each retailer per unit actually sold) implements the optimal production and sales strategy, attaining maximum expected profit in the channel.     

Buying power and strategic interactions

Abstract.  This paper shows that buying power at the retail level can lead to a rise in wholesale price. As a result, retailers without buying power may increase their retail price. Nevertheless, total surplus is non‐decreasing in the degree of buying power possessed by the 'dominant' retailer. JEL classification: L13     

The strategic value of partial vertical integration

We investigate the strategic incentives for partial vertical integration, namely, partial ownership agreements between manufacturers and retailers, when retailers privately know their costs and engage in price competition with differentiated goods. The partial misalignment between the profit objectives within a partially integrated manufacturer–retailer hierarchy implies a higher retail price than under full integration. This ‘information vertical effect’ translates into a ‘competition horizontal effect’: the partially integrated hierarchy's commitment to a higher price induces the competitor to increase its price, which strategically relaxes competition. Our analysis provides implications for vertical merger policy and theoretical support for the recently documented empirical evidence on partial vertical acquisitions.     

HOW FAIR IS FAIR TRADE?

Fair trade, also known as resale price maintenance (RPM), is a per se violation of the antitrust laws. Economic theory suggests that RPM may enhance the efficiency of distribution, but opposition to the practice remains strong. This opposition may stem from concern that RPM raises retail prices and penalizes well-informed customers. This paper summarizes research on the motivation for RPM as well as its impact on prices. The analysis suggests that comparing prices in RPM jurisdictions with those in free-trade areas provides little guidance on likely effects if RPM were permitted everywhere. An analysis of RPM's impact on prices is developed, and then this analysis is employed to assess RPM's welfare effects. Results of the welfare analysis are shown to depend crucially on which form of cost function is assumed for services provided by dealers.     

Retailers and consumers in sequential auctions of collectibles

Abstract.  We analyse an independent private-value model, where heterogeneous bidders compete for objects sold in sequential second-price auctions. In this heterogeneous game, bidders may have differently distributed valuations, and some have multi-unit demand with decreasing marginal values (retailers); others have a specific single-unit demand (consumers). By examining equilibrium bidding strategies and price sequences, we show that the presence of consumers leads to more aggressive bidding from the retailers on average and heterogeneous bidders is a plausible explanation of the price decline effect. The study of the expected revenue of the seller confirms the interest of auctioneers in inviting different types of bidders.     

基于响应时间的供应链协调策略研究

在市场需求价格和响应时间敏感下,本文以一个供应商和一个制造商构成的两级MTO供应链为背景,通过建立供应链收益函数模型,分析响应时间对供应链企业决策的影响。给出了供应商和制造商在分散决策下的最优响应策略,得出了供应链双方在分散决策下无法实现供应链完美协调的结论。而后,对供应链协调问题进行了探讨,发现两部收费制契约在满足一定条件下能够实现供应链完美协调,并通过数值实例对上面的结论进行了释义和说明。     

纵向关联市场间的价格传递

本文运用均衡移动模型研究农业生产者与食品零售商之间的纵向价格传递关系。模型建立在如下假设之上:即农产品(食品)营销企业在零售环节拥有寡占卖方力量、在农产品收购环节拥有寡占买方力量、营销企业所需要的农产品投入与其他营销投入之间存在一定替代关系并拥有规模报酬可变的技术。结果表明,市场力量和规模报酬对价格传递的影响十分复杂,一方面取决于农产品供给函数和食品需求函数的具体形式,另一方面还取决于外生冲击作用下农产品收购环节与食品零售环节市场力量变化的相对幅度。     

RESALE PRICE MAINTENANCE AND DISTRIBUTIONAL EFFICIENCY: SOME LESSONS FROM THE PAST

Resale price maintenance (RPM) has had a history similar to that of a religious war, with the legal status shifting as the various sects have had more or less influence over the courts and the political arenas. Both the RPM and anti-RPM missionaries have overstated their cases. In theory, RPM can have both procompetitive and anticompetitive effects. Unfortunately, most of the dispute has been theoretical (theological); both sides have provided minimal empirical support for their theological conclusions. The empirical evidence, though sketchy, shows both procompetitive and anticompetitive instances of RPM. In particular, history warns that strongly organized interest groups tend to use the political process to enforce abuses of a distributional restraint that theoretically might otherwise have primarily procompetitive effects. The theoretical and empirical record does not support either per se legality or illegality for RPM in all instances. In some situations, such as for small firms in unconcentrated wholesale and retail markets and for new entrants, the probability of anticompetitive effects is negligible. In other situations, the evidentiary burden of demonstrating either the likelihood of anticompetitive effects, or of their absence, would be practically insurmountable in a litigation context. Rule-of-reason litigation, then, also seems to be an unwise policy choice. On balance, considering the economic, political, and legal constraints, we recommend continuing the current per se illegal standard, but with exceptions for clearly defined instances in which the probability of anticompetitive effects is minimal.     

买方抗衡势力与制造商定价决策

本文研究了买方抗衡势力的存在对上游制造商定价决策的影响,讨论了制造商在不同定价形式（线性定价、两部收费制和转售价格维持（RPM））之间的选择问题,并构建了两阶段动态博弈模型,引入买方抗衡势力,比较分析了制造商在零售商具有和不具有买方抗衡势力两种情况下,制造商最优定价形式的选择。研究发现当零售商不具有买方抗衡势力时,制造商选择两部收费制和RPM是无差异的,都能使上游制造商获得相等的最优利润;当零售商具有买方抗衡势力时,对于上游制造商来说两部收费制优干RPM,RPM又优于线性定价。此外,本文还发现存在一个由抗衡势力和零售商替代程度决定的临界条件,当满足这一条件时,两部收费制是上游的最优选择;一旦这一条件不满足时,RPM就成了上游的最优选择。     

A tale of two Italian cities: brand-level milk demand and price competition

We apply the BLP random coefficient logit model demand model to fluid milk sales data from two north-south Italian cities: Turin and Naples. By virtue of their location and socioeconomic differences, these cities provide a natural experiment for contrasting consumer choices and retail market power related to milk physical and marketing characteristics. Results reveal that, regardless of location, consumers negatively value price increases, fat content and ultra-high temperature (UHT) treatment. However, location matters with respect to brand and type of milk purchased. While in Turin (the higher-income region) demand for the leading manufacturers’ brands is the most price inelastic, in Naples consumers have the lowest price elasticities in case of cheaper milk, often small manufacturer or private label brands. Unlike previous studies, we do not find price elasticities for private labels to be consistently lower (or markups to be higher) compared to manufacturer brands, indicating that private labels have reached maturity in these markets. Further, while demand for fresh milk is more price inelastic in Turin, it is more inelastic for UHT milk in Naples. Likewise, markups and Lerner indexes are higher for fresh milk in Turin and for UHT in Naples corresponding to the more inelastic demands under Bertrand price competition.     

Effects of wholesaler concentration on retailers by format: evidence from Japanese brand-level price data

Using unique brand-level wholesale price data, this article examines how purchase prices of commodities for retailers are influenced by wholesale concentration. Compared with studies focusing on retail prices, little empirical work has measured the impact of wholesale concentration on wholesale prices. Economic theory suggests that the sensitivity of purchase price in response to degree of wholesale concentration is smaller for large retail formats than for small retail formats in the presence of intra-format retail competition. To test the validity of the theoretical implication, I measure the impact of the concentration on purchasing prices for retailers by format. Empirical findings support the hypothesis that the large retail format tends to draw advantageous purchase prices when wholesalers become increasingly oligopolistic.     

企业降价与总收益关系的新认识

随着环境的变化,企业有时候要调低产品价格。本文针对一些企业错误地应用关于降价与总收益关系的传统结论的现象,结合数学和经济学,提出了很多命题,对降价与总收益之间的关系揭示得很清楚,对于传统的需求价格弹性理论关于降价与总收益之间关系的不完全准确认识的一种修正,也是对需求价格弹性理论应用的拓展;且本文分别用图形形象地表示出降价与总收益之间的关系,结合企业在调低价格后给予一定的指导——企业降价后还要进行跟踪调查、还要根据效果采取相应措施、要关注客户需求量的变化、降价不是拍脑袋的事情,这具有一定的现实意义。