Salience and Online Sales: The Role of Brand Image Concerns

Konferenzbeitrag

We provide a novel intuition for the observation that many brand manufacturers have restricted their retailers' ability to resell brand products online. Our approach builds on models of salience according to which price disparities across distribution channels guide a consumer's attention toward prices and lower her appreciation for quality. Thus, absent vertical restraints, one out of two distortions – a quality or a participation distortion – can arise in equilibrium. The quality distortion occurs if the manufacturer provides either an inefficiently low quality under price salience or an inefficiently high quality in order to prevent price salience. The participation distortion arises as offline sales might be entirely abandoned in order to prevent prices from becoming salient. Both distortions are ruled out if vertical restraints are imposed. As opposed to the current EU legislation that considers a range of vertical restraints as being hardcore restrictions of competition, we show that these constraints can be socially desirable if salience effects are taken into account.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Beiträge zur Jahrestagung des Vereins für Socialpolitik 2018: Digitale Wirtschaft - Session: Industrial Organisation - Theory II ; No. D09-V3

Classification and Topics

• Classification: Wirtschaft ; Firm Behavior: Theory ; Antitrust Law ; Vertical Restraints; Resale Price Maintenance; Quantity Discounts
• Subject: Salience ; Online Sales ; Antitrust ; Vertical Restraints ; Distribution Channels

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Dertwinkel-Kalt, Markus ; Köster, Mats
• Event: Veröffentlichung
• (who): ZBW - Leibniz-Informationszentrum Wirtschaft
• (where): Kiel, Hamburg
• (when): 2018

Further information

• Handle: http://hdl.handle.net/10419/181498
• Last update: 10.03.2025, 11:43 AM CET