Fixed, focal, fair? Book prices under optional resale price maintenance

Arbeitspapier

In media markets, products are highly differentiated but prices are often bunched at apparent focal points. I use a comprehensive cross-section data set on the German book market to assess whether such focal points are a result of upstream coordination and whether the option to impose resale price maintenance (RPM) played a facilitating role. Therewith, I provide empirical evidence to a long-lasting policy debate. Results suggest that focal prices are used to coordinate competition rather than collusion. Focal prices are mostly lower than expected from hedonic projections. In cases where the decisions on focal pricing and RPM are positively correlated, controlling for endogeneity and a number of other factors, RPM does not seem to facilitate above average focal pricing in particular.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: WZB Discussion Paper ; No. SP II 2004-15

Classification and Topics

• Classification: Wirtschaft ; Production, Pricing, and Market Structure; Size Distribution of Firms ; Oligopoly and Other Imperfect Markets ; Vertical Restraints; Resale Price Maintenance; Quantity Discounts ; Entertainment; Media
• Subject: resale price maintenance ; focal prices ; vertical restraints ; collusion ; simultaneous probit ; book industry

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Beck, Jonathan
• Event: Veröffentlichung
• (who): Wissenschaftszentrum Berlin für Sozialforschung (WZB)
• (where): Berlin
• (when): 2004

Further information

• Handle: http://hdl.handle.net/10419/50981
• Last update: 10.03.2025, 11:44 AM CET