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The Evolving Law and Economics of Resale Price Maintenance

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Economic developments since the publication of The Antitrust Paradox have reinforced Bork’s view that resale price maintenance is part of the competitive market process by which firms create efficient distribution arrangements. Even when there is no retailer free riding, manufacturers cannot rely entirely on retailer competition to supply desired point-of-sale retailing services because retailer promotion has little or no inter-retailer demand effects. Consequently, manufacturers must compensate retailers for devoting their valuable retail assets to the sale of a manufacturer’s products, and resale price maintenance often is an efficient way to accomplish this. Therefore, contrary to Bork, retailers may initiate demands for resale price maintenance to obtain a competitive market price for their promotional services.

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