Empirical Regularities in the Vertical Restraints of Manuacturing Firms

This paper exploits a unique panel data set of Spanish manufacturing firms that contains information on vertical restraints affecting retailers and wholesalers. First, we analyze the scope of vertical restraints by identifying industry and size heterogeneities. Second, we explore the determinants of...

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Bibliographic Details
Published in:Atlantic economic journal 2015-06, Vol.43 (2), p.181-194
Main Author: González, Xulia
Format: Article
Language:English
Subjects:
Agreements
Antitrust
Competition
Datasets
Decision making
Economic models
Economic statistics
Economic theory
Economics
Economics and Finance
International Economics
Macroeconomics/Monetary Economics//Financial Economics
Manufacturers
Manufacturing
Market entry
Microeconomics
Price cuts
Prices
Profits
Public Finance
Regulation
Resale price maintenance
Retail stores
Social exclusion
Studies
Vertical integration
Wholesalers
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Summary:This paper exploits a unique panel data set of Spanish manufacturing firms that contains information on vertical restraints affecting retailers and wholesalers. First, we analyze the scope of vertical restraints by identifying industry and size heterogeneities. Second, we explore the determinants of resale price maintenance by focusing on the effect of an upstream firm’s effort to increase demand. After presenting a simple theoretical framework, we use a linear probability model to analyze the empirical determinants of a manufacturing firm’s control of the resale price. We find that firms that make a greater advertising effort impose a resale price more frequently, as do larger firms and those that impose other restraints such as exclusive territories.
ISSN:0197-4254
1573-9678
DOI:10.1007/s11293-015-9452-8