“ When Should Manufacturers Want Fair Trade ? ” : New Insights from Asymmetric Information ∗

@inproceedings{Kastl2009WS,
  title={“ When Should Manufacturers Want Fair Trade ? ” : New Insights from Asymmetric Information ∗},
  author={Jakub Kastl and David Martimort and Salvatore Piccolo},
  year={2009}
}
We study a specific model of competing manufacturer-retailer pairs where adverse selection and moral hazard are coupled with non-market externalities at the downstream level. In this simple framework we show that a “laissezfaire” approach towards vertical price control might harm consumers as long as privately informed retailers impose non-market externalities on each other. Giving manufacturers freedom to control retail prices harms consumers when retailers impose positive non-market… CONTINUE READING

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